I interpreted for the late Honolulu Mayor Frank Fasi in Tokyo meetings with Hitachi, Fujitsu and SONY CEOs to move electronics assembly plants to Hawaii — in 1984! Over 40 years ago in midst of U.S.-Japan trade battles, Fasi envisioned Japanese tech innovation transforming Hawaii’s economy — but subsequent Hawaii leaders failed to sustain his initiatives. Why is Fasi’s vision relevant today?
After Donald Trump’s 2024 presidential election win, the key economic policy word is “tariffs.”
Tariffs are a tax on imported goods to the U.S. and those taxes fund the federal government. Tariffs are not new: the U.S. Congress passed the Tariffs Act of 1789 (iron and cloth). Up to the 20th century, tariffs paid for much federal government costs.
Trump’s tariffs obsession is expressing a grievance: foreign firms flooded the U.S. with “cheap” goods, thereby driving U.S. firms into bankruptcy and laying off U.S. workers. To mitigate U.S. “losses,” Trump wants foreign firms to invest in the U.S. and hire local workers.
Hawaii’s dilemma is that the state cannot gain advantage from Trump’s tariffs since it doesn’t make cheaper products that replaces imports. Sugar and pineapple were shipped to the mainland. No one can list the top “made in Hawaii” foreign export products; Hawaii’s export sales options are limited. Hawaii is all about imports, like Mexican avocados, Canadian salmon or Thai shrimp.
Imported steel and aluminum tariffs, especially on Canadian products, will not only increase post-COVID construction costs (houses, hotels, rail), but also inflate canned foods’ costs, like the islands’ staple corned beef.
Unique in the U.S. car market, Hawaii has a high percentage of imported Japanese vehicle sales, so Hawaii new car buyers will see higher sticker prices.
Finally, today China provides the widest range of exports to Hawaii. For the Hawaii economy, a 10% tariff on all Chinese imports (including online sales) is a tsunami: from souvenir hula dolls to Costco televisions to Walgreens’ drugs, the list is endless. Hawaii is addicted — like the rest of the world — to Chinese products.
Is there any upside for Hawaii in Trump’s tariffs “shock”? Fasi’s 1984 meetings with Japan CEOs showed that timing is everything. Fasi tried to exploit the 1980s U.S.-Japan tariff issues for Hawaii economic gain.
Trump’s challenge to foreign firms’ profits is Hawaii’s chance again to create a diversified economy with Hawaii worker salary growth. (In 2024, one-third of Hawaii households were classified as ALICE — Asset Limited, Income Constrained, Employed — or below the threshold to afford necessities like food, rent and medicine; plus, 1 in 3 Hawaii households were considering leaving the state.)
Hawaii does not have a “normal” export-focused economy that pays “living wages.” And Hawaii lags behind mainland states like Tennessee, Georgia and North Carolina that attracted Japanese firms like Toyota — which hired thousands of local workers for high-paying jobs.
Among U.S. states competing for foreign firms (pre-Trump), Hawaii is a loser. So how can Hawaii become a winner in the foreign investor sweepstakes?
Unlike some mainland states, Hawaii cannot sustain huge car or lithium battery factories. Instead, Hawaii should focus on South Korean vertical agriculture technology; Japanese renewable energy and video-games; Chinese e-commerce, clothing and furniture; and Canadian aquaculture for farmed fish.
With diminished federal funding, the University of Hawaii should partner with industry to train a local workforce in AI (artificial intelligence), research and development and supply-chain/logistics.
A bonus will be that some food items will be grown in Hawaii, no longer imported — why not, for instance, grow Mexican Hass avocados in Hawaii greenhouses using South Korean technology?
A window has opened: Mayor Fasi’s 1980s vision of Hawaii as the mid-Pacific trade and tech hub should be revived — and through new jobs’ salary growth stop Hawaii families from moving to the continent.
Ray Tsuchiyama was with M.I.T. and Google, and now is in management consulting and real estate.
