A Japanese manufacturer navigates US trade policy shifts - NHKニュース
A Japanese manufacturer navigates US trade policy shifts Since United States President Donald Trump returned to office for a second term, he has made tariffs a signature strategy of his administration. Although it remains to be seen how US trade policies will shift after the recent midterm elections, Japanese companies operating in the country have already been grappling with tariff pressures by adjusting its supply chains and business strategies while continuing to pursue growth opportunities in this market. NHK World's Amma Raimu reports.
Trump has imposed sweeping tariffs on imports from across the globe in an effort to revive domestic manufacturing. For Japanese construction equipment maker Komatsu, North America is its largest market, accounting for nearly 30 percent of sales. About half of the products it sells in the US are imported from facilities such as its production plant in Ibaraki Prefecture, near Tokyo.Tariffs are expected to cost the company about 510 million dollars this fiscal year. But shifting more production to the US is not easy.
Komatsu's General Manager of its Production Controlling Department Takahashi Hiroaki explains: "Steel prices in the United States are the highest in the world. They're about 1.5 to 1.6 times higher than in Japan. Labor costs are also much higher. Manufacturing in the US is very expensive."
To reduce tariff-related costs, the company has restructured its supply chain. Drawing on its 60 production sites around the world, it is sourcing products from countries facing lower import duties in the US. It is also developing direct shipping routes to Canada, Mexico, Peru and Colombia that bypass the US.
At home, the company is working to improve production efficiency. During a visit to a supplier producing a key component, its managers discussed measures aimed at reducing costs and improving profitability."Material and energy costs have also been rising sharply," says Morizumi Tatsuo, who works in the company's Manufacturing Engineering Department. "We need to keep finding ways to stay profitable, even with the outside cost pressures."The company has also introduced a new manufacturing process designed to shorten machining steps, which its supplier has agreed to.
It is pursuing another measure as well -- applying for tariff refunds. According to its North American operation, duties were paid on the value of entire machines rather than only their steel content. It is now seeking to recover part of those payments.
Despite tariff pressures, Komatsu says it continues to see growth opportunities in the US market. Demand related to AI data centers and mining projects remains strong.Komatsu President Imayoshi Takuya says: "The US has many mining operations, from coal and copper to iron ore and gold. We have a lot of customers in those industries. With the population and economy growing, we believe the market still has room to expand."At the same time, the company does not foresee a change in US trade policies. Imayoshi notes: "We expect trade barriers, including tariffs, to remain in place for the foreseeable future. And that's not just in the US. Given the current global situation, I don't think we will go back to the kind of free trade environment we saw in the past, at least for a while. We'll need to adapt to changing conditions."As the global trade environment continues to shift, Japanese companies are seeking to build more resilient supply chains while maintaining access to key markets.
Japan External Trade Organization (JETRO) official Ito Misako says these companies have come to recognize that a business strategy heavily dependent on the US market alone carries significant risks under the Trump administration's policies. She stresses that diversifying supply chains will be critical for companies' future business planning, while enhancing the indispensability of their products will become an even greater priority.Ito adds that regardless of which party is in power, the principle of putting "America First" is likely to remain a key feature of US policy. She notes that therefore companies should not expect tariffs to return quickly to previous levels and must develop business strategies on the assumption that current trade policies have become the new normal.
