It was you that brought up assumptions, so let's assume that you are correct and that the Japanese, in fact, sell at below cost. That would mean that the more they sold the more money they'd lose - and for two reasons if you consider the law of diminishing returns on the factors of production as output increased. Let's also assume that the Japanese government is involved in this conspiracy to drive out U.S. domestic producers and that they help their producers by subsidizing. Let's also assume that the now displaced American worker can only find a "burger flipping" job OR, have to remain a public charge to the taxpayer for how many ever weeks the benefits last. The final assumption is that the American consumer gets no utility from the below cost products that the Japanese producers made.
My next two questions are:
How are we worse off? And what happens to the Japanese economy for their shenanigans in altering the marketplace?
Well, obviously cheaper goods are bad for Americans. When Americans save money it's bad.
When the Japanese lose money to sell us cheaper goods it's obviously good for Japan.
You just don't understand economics. We need a tariff to stop Americans from saving money.
Your first mistake is your assmption that the law of diminishing returns holds for all industries. In fact, it doesn't always hold. Some industries exhibit scale economies, i.e. marginal costs continue to decline with scale until you reach a large very market share. In such industries there is room for only a handful of producers, which gives rise to a natural oligopoly. Consumer electronics is just such an industry.
So what the Japanese did, temporarily, was to subsidize their producers and protect their domestic market so they could (collectively) undercut American producers and gain market share. Once they had gained sufficient market share, they were in a position to exploit the scale economies, whereas American producers were not. That enabled them to underprice American producers while making a profit. Once American producers were driven out, they captured the market, raised their prices, and now earn the oligopoly rents. The fact that the industry has large scale economies enables them to deter new entrants, who necessarily cannot produce on an effecient scale. The fact that their government is committed to protecting their dominance of the industry further discourages entry.
The final assumption is that the American consumer gets no utility from the below cost products that the Japanese producers made.
I made no such assupmtion. Sure, there was a time during the late '70's and early '80's when American consumers derived utility from the dumped products. But that was a temporary phenomenon. Once the Japanese had entrenched themselves in the market, that ended and now they enjoy the economic rents that come with oligopoly.
Two answer your questions, then:
1) We're worse off in the long run becuase we permanently lose the oligopoly rents associated with the industry.
2) The Japanese economy now benefits from those rents.