Komatsu could see a reduction of nearly 20 billion yen ($140 million) in the financial impact of US tariffs following last week’s trade truce between the US and China, the Japanese firm’s CEO has said, suggesting the company’s outlook may not be as dire as initially projected.
With over a quarter of its sales coming from North America, Komatsu is expected to benefit significantly from what amounts to a 20% easing in the previously forecast 94.3 billion yen tariff-related hit—an adjustment that could substantially boost its profit outlook.
In an interview with Reuters on Wednesday, CEO Takuya Imayoshi did not confirm a formal revision to last month’s projection of a 27% fall in full-year profits, which the company had blamed on tariffs imposed by US President Donald Trump. However, he acknowledged that the 90-day suspension of additional tariffs on Chinese imports may ease the burden on Komatsu, which sources Chinese steel for use in its US-manufactured equipment.
“Countries’ retaliatory tariffs haven’t been like what we previously feared, so the negative impact on our performance appears limited,” Imayoshi said.
Komatsu has forecast an operating profit of 478 billion yen for the fiscal year ending March 2026, citing the effects of tariffs and a stronger yen. That estimate falls well short of the 597.5 billion yen consensus among analysts compiled by LSEG, which reflects only a 9% decline from the previous year.
Despite the anticipated relief, Imayoshi remained cautious, noting that “if tariff rates are adjusted with countries, the impact will likely settle within the previously made estimate.”
He also pointed out that around half of Komatsu’s US-sold products—such as construction machinery from Japan, Brazil, and Thailand—are still manufactured overseas and remain subject to elevated tariffs.
To minimise exposure, the company is weighing measures such as rerouting spare parts exports away from US warehouses to destinations like Canada and Latin America, and possibly relocating production of US-bound equipment from China to Thailand if higher US tariffs resume after the 90-day pause.
Imayoshi dismissed the possibility of ramping up domestic US production, citing high local steel prices, which he said are more than double those in China. “It’s never the case that the tariffs can make manufacturing in the US cost-competitive,” he said.
While the overall effect of tariffs on Komatsu’s competition with market leader Caterpillar and other rivals may be limited due to similarly globalised supply chains, Imayoshi said Komatsu would monitor how others choose to pass on tariff costs to customers.
Caterpillar recently estimated its additional tariff-related costs for the April–June quarter at between $250 million and $350 million. Its shares are down 4.8% year-to-date, while Komatsu’s stock is up 1.5%.
Faridah Abdulkadiri
Follow us on:
