Connect with us

Hi, what are you looking for?

Stock

Canada’s retaliation for Trump tariffs is biggest concern, says Japan’s Komatsu

By Kantaro Komiya and Maki Shiraki

TOKYO (Reuters) – The top business risk of the Trump presidency for heavy-duty equipment maker Komatsu (OTC:KMTUY) is not the tariffs he has threatened, but Canada’s potential retaliatory duties on American-made mining machines, the head of the Japanese company said.

The view of a global manufacturer flags the possible knock-on impact of Trump’s pledge for tariffs on imports from Canada, China and Mexico when he takes office, especially if the targets decide to retaliate with trade barriers on their own.

Komatsu, the world’s second-largest construction machinery company after Caterpillar (NYSE:CAT), earns more than a quarter of its sales from North America and employs about 8,000 staff in the United States.

The risk of retaliatory tariffs by Canada, the largest export destination for the mining equipment Komatsu makes in the United States, is “my biggest concern” when Trump’s second term begins next month, Chief Executive Hiroyuki Ogawa told Reuters.

“We are an exporter in America,” Ogawa said, adding that Komatsu’s U.S. exports have surpassed imports by about $1 billion a year since its 2017 acquisition of Milwaukee-based mining machinery maker Joy Global (NYSE:JOY).

“We’re basing our business on free trade,” Ogawa said. “A tariff war could land a one-two punch on us.”

    The impact of the threatened tariffs on U.S.-bound components such as sheet metal from China is “not very big” and could be mitigated if necessary by shifting supply sources elsewhere, such as from Southeast Asia, within two to three months, he added.

Apart from trade policies, Trump’s vow to maximise fossil fuel use would serve as a positive counterbalance to shrinking demand for heavy machinery in the United States due to oversupply in the rental market, Ogawa said.

Komatsu will keep investing in the United States regardless of who the president is, Ogawa said, vowing to spend about $80 million for a mining equipment service centre in Arizona and $65 million for ABS, a Detroit-based battery maker bought last year.

Ogawa expects a “challenging” business landscape in the next fiscal year starting in April, with global demand likely to stay flat. He cited concerns about rising fixed costs and fewer chances for price hikes as supply chains return to normal.

Komatsu forecasts operating profit of 573 billion yen ($3.65 billion) in the current fiscal year to March 2025, down 5.6% on the year.

($1 = 156.8800 yen)

This post appeared first on investing.com

Enter Your Information Below To Receive Free Trading Ideas, Latest News And Articles.






    Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

    You May Also Like

    Editor's Pick

    Former president Donald Trump and his allies have filed hundreds of lawsuits, with more to come, seeking to tighten voting rules or disqualify voters....

    Economy

    LONDON (Reuters) – Bank of England interest rate-setter Megan Greene said she still believed the central bank should take a cautious approach to cutting...

    Editor's Pick

    Sister Stephanie Schmidt had a hunch about what her fellow nuns would discuss over dinner at their Erie, Pennsylvania, monastery on Wednesday night. The...

    Latest News

    Warner Bros. Discovery said Thursday its streaming platform Max added 7.2 million global subscribers in the third quarter. It marked the biggest quarterly growth for...

    Disclaimer: beneficialinvestmentnow.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.


    Copyright © 2024 beneficialinvestmentnow.com