US-China trade truce could cut Komatsu’s tariff burden by $140m, says CEO

A trade truce between the US and China could ease Japanese construction equipment manufacturer Komatsu’s tariff pain by as much as 20 billion yen (US$140 million).

That is according to the firm’s CEO, Takuya Imayoshi, who was speaking to Reuters in an interview.

The company had previously forecast a 27% fall in current-year profits as a result of US President Donald Trump’s tariffs, although the company did not say if it is officially planning to revise that forecast.

Komatsu buys Chinese steel for its American-made machines and a 90-day pause in extra US tariffs on Chinese imports could mitigate the impact on the company, Imayoshi said.

“Countries’ retaliatory tariffs haven’t been like what we previously feared, so the negative impact on our performance appears limited,” he said.

However, Komatsu will remain somewhat exposed to higher US tariffs because about half of its products sold in the US are manufactured overseas in countries like Japan, Brazil and Thailand, before being imported.

Imayoshi said “it’s never the case” that the tariffs could make US manufacturing cost-competitive and drive Komatsu to increase its production in the US because US steel prices are more than double Chinese steel prices.

Komatsu forecasts 27.3% drop in operating profit Japanese construction equipment manufacturer Komatsu forecast a 27.3% decline in operating profit for its 2025 financial year, amid rising costs

Chinese rivals taking market share

He also noted that competition with Chinese OEMs is becoming as demanding as it is with its major rival Caterpillar.

Off-Highway Research’s managing director Chris Sleight told Reuters that Chinese rivals Sany, XCMG and LiuGong are all taking market share from Komatsu, alongside other established brands in emerging markets with lower prices and excess capacity.

Komatsu “still leads in durability and reliability, but they have largely caught up in offering decent performance at lower initial costs - in electrification, they [Chinese manufacturers] are actually ahead,” Imayoshi said.

He indicated that the company, which has not made any major purchases since buying US mining equipment manufacturer Joy Global for $2.9 billion in 2017, could be open to acquisitions to enhance electrification and technology solutions for software-defined and autonomous vehicles.

In a mid-term business plan announced last month, Komatsu added a free cash flow target of 1 trillion yen in the next three years.

“We plan to spend it while maintaining balance between investments and shareholder returns, and it can also be directed toward acquisitions if opportunities arise,” Imayoshi said.

“Financial structure-wise, we have considerable leeway.”

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