Komatsu Sees $140M Tariff Relief Boost Amid U.S.-China Trade Truce

Komatsu, the world’s second-largest construction and mining machinery maker, expects a ¥20 billion ($140 million) reduction in tariff-related costs following the recent U.S.-China trade truce. CEO Takuya Imayoshi said this 20% easing of the previously forecast ¥94.3 billion hit could soften the impact on its bottom line. With over a quarter of its sales from North America, the relief is significant, though the company has not officially revised its profit forecast.

Komatsu had predicted a 27% profit drop for the fiscal year ending March 2026, citing U.S. tariffs and a stronger yen. The forecasted operating profit stands at ¥478 billion, below the ¥597.5 billion consensus estimate. The 90-day pause in new U.S. tariffs is a key factor, especially since Komatsu uses Chinese steel for U.S.-bound machinery.

Despite the relief, about half of Komatsu’s U.S. sales are from imported machines, mainly from Japan, Brazil, and Thailand, which still face higher tariffs. The company is exploring supply chain shifts, including rerouting spare parts and relocating production from China to Thailand. However, Imayoshi dismissed the idea of expanding U.S. production due to high local steel costs.

Imayoshi noted minimal competitive impact from tariffs as global players like Caterpillar face similar challenges. Still, Komatsu is closely watching how rivals manage cost pass-throughs. While Caterpillar expects $250M–$350M in tariff-related costs this quarter, its shares are down 4.8% YTD, compared to Komatsu's 1.5% gain.

Imayoshi also acknowledged rising competition from Chinese machinery makers, particularly in electrification. Komatsu is eyeing new acquisitions, potentially in tech or electrification, backed by a ¥1 trillion free cash flow target over three years and a strong financial position.