Canada’s retaliation towards Trump tariffs greatest concern, says Japan’s Komatsu

By Kantaro Komiya and Maki Shiraki

TOKYO (Reuters) – The most important enterprise danger of the Trump presidency for heavy tools maker Komatsu lies not within the tariffs it has threatened, however in potential Canadian retaliation on U.S.-made mining machines. United, declared the boss of the Japanese firm.

A world producer’s perspective highlights the potential fallout from Trump’s pledge to impose tariffs on imports from Canada, China and Mexico when he takes workplace, particularly if the targets resolve to retaliate on their very own with commerce boundaries.

Komatsu, the world’s second-largest development equipment maker after Caterpillar, generates greater than 1 / 4 of its income in North America and employs about 8,000 individuals in the US.

The danger of customs retaliation from Canada, the most important export vacation spot for U.S.-made Komatsu mining tools, is “my greatest concern” when Trump’s second time period begins subsequent month, the president stated. managing director Hiroyuki Ogawa at Reuters.

“We’re an exporter in America,” Ogawa stated, including that Komatsu’s U.S. exports have exceeded imports by about $1 billion a 12 months since its 2017 acquisition of Milwaukee-based mining machine maker Pleasure International.

“We base our enterprise on free commerce,” Ogawa stated. “A tariff battle might give us a double whammy.”

The impression of threatened tariffs on parts destined for the US, corresponding to sheet metallic from China, is “not very vital” and could possibly be mitigated if crucial by shifting sources of provide elsewhere, as in Southeast Asia, inside two to a few months, he added.

In addition to commerce insurance policies, Trump’s push to maximise the usage of fossil fuels would function a constructive counterbalance to declining demand for heavy equipment in the US as a consequence of oversupply within the rental market, stated Ogawa.

Komatsu will proceed to put money into the US no matter who’s president, Ogawa stated, pledging to spend about $80 million on a mining tools service heart in Arizona and $65 million on ABS, a battery maker primarily based in Detroit, bought final 12 months.

Ogawa expects a “difficult” enterprise panorama within the subsequent fiscal 12 months beginning in April, with international demand more likely to stay secure. He cited considerations about rising fastened prices and diminishing dangers of value will increase as provide chains return to regular.

Komatsu forecast working revenue of 573 billion yen ($3.65 billion) for the present fiscal 12 months via March 2025, down 5.6% on the 12 months.

($1 = 156.8800 yen)

(Reporting by Kantaro Komiya and Maki Shiraki; enhancing by Clarence Fernandez)