- Title: Canada's retaliation for Trump tariffs is biggest concern, says Japan's Komatsu
- Date: 20th December 2024
- Summary: TOKYO, JAPAN (DECEMBER 16, 2024) (REUTERS) (SOUNDBITE) (Japanese) CEO OF JAPANESE HEAVY MACHINERY MANUFACTURER KOMATSU, HIROYUKI OGAWA, SAYING: “There are environmentally friendly (heavy-duty) vehicles, but when it comes to carbon reduction, it’s not a high demand of customers in the U.S.. However, there might be more needs in the future, so we’re trying to gradually expan
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- Keywords: Canada Donald Trump Japan Komatsu U.S. US-elected President export global business heavy machinery manufacturer tariffs
- Location: TOKYO, JAPAN / UNIDENTIFIED LOCATION
- City: TOKYO, JAPAN / UNIDENTIFIED LOCATION
- Country: Japan
- Topics: Asia / Pacific,Company News Markets,Economic Events
- Reuters ID: LVA003822719122024RP1
- Aspect Ratio: 16:9
- Story Text: The largest business risk of the Trump presidency is not the tariffs he proposed, but Canada's potential retaliatory duties on U.S.-made mining machines, the head of Japanese heavy-duty equipment maker Komatsu said on Monday (December 16).
The view of a top global manufacturer highlights the possible knock-on impact of president-elect Donald Trump's pledge to put tariffs on imports from Canada, Mexico and China when he takes office in a month, especially if the countries decide to retaliate by erecting trade barriers on their own.
Komatsu, the world's second-largest construction machinery company after Caterpillar, earns more than 25% of its sales from North America and employs about 8,000 staff in the United States.
The possibility of retaliatory tariffs by Canada, the largest export destination for the mining equipment Komatsu makes in the U.S., is "my biggest concern" for the second Trump term, chief executive Hiroyuki Ogawa said.
"If Canada imposes retaliatory tariffs (on the U.S.), for example, a 25% tariff, it will mean that our products exported from the U.S. would be subject to tariffs. The impact of the retaliatory tariffs would be huge,” said Ogawa, adding that Komatsu's exports from the U.S. have surpassed imports by about $1 billion each year since its 2017 acquisition of Milwaukee-based mining machinery manufacturer Joy Global.
“We conduct business based on free trade, so in that sense, a tariff war could land a one-two punch on us, and that’s something I’m worried about,” Ogawa said.
Apart from trade policies, Trump's stance to roll back fossil fuel use would bring a positive counterbalance to the shrinking heavy machinery demand in the U.S. due to the oversupply in the rental market, he said.
But overall, Ogawa expects a "challenging" business landscape in the next fiscal year starting in April, with global demand likely to remain flat. He cited concerns about rising fixed costs and slimmer chances to keep up with price hikes in a normalising supply chain environment.
On zero-emission vehicles, Ogawa said European utility users and major mining companies will be the first customers of electrified machines.
But it is unclear when and how the mass market will take to electric-construction machinery, especially in the U.S., where carbon reduction is not the customers' priority, he said.
"However, there might be more needs in the future, so we’re trying to gradually expand the sales of hybrid vehicles in the U.S..”
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