- US lowers construction machinery tariff from 25% to 15%.
- Komatsu and Hitachi expect tariff savings of JPY 12 bn and JPY 9.7 bn.
Japan Metal Daily: The United States has revised the additional tariffs imposed on steel and aluminium derivative imports under Section 232 of the Trade Expansion Act. The country has retained the 50% tariff on steel imports. However, it has changed the taxation method for derivative products.
Earlier this year, the US replaced the declaration system based on iron and aluminium content with an ad valorem tariff system. This change capped the effective tariff rate at 25%. Later, on 8 June, the US reduced the tariff on construction machinery imports from 11 countries and regions, including Japan, South Korea and the European Union, to 15%.
The lower tariff has reduced cost pressures for construction machinery manufacturers. However, companies remain concerned about uncertainty in future US trade policy.
Japanese machinery exporters see lower tariff burden
The Section 232 measures have hit Japan’s construction machinery exports to the US the hardest. Major manufacturers, including Komatsu, Hitachi Construction Machinery and Kobelco, have passed the additional tariff costs on to customers through higher selling prices.
The tariff reduction from 25% to 15% has lowered the expected financial impact for manufacturers. In addition, the US Supreme Court struck down the reciprocal tariffs as unconstitutional. As a result, Komatsu expects its tariff-related costs to decline by about JPY 12 billion during the current fiscal year. Hitachi Construction Machinery expects the impact to fall by around JPY 9.7 billion.
Temporary relief amid US steel expansion plans
The 15% tariff reduction is only a temporary measure. It will remain in effect until the end of next year.
Meanwhile, the US government continues to prioritise domestic steel production. It expects more than 4 million tonnes of new crude steel production capacity to come online over the next two years. The new capacity will be located in states including West Virginia, Arkansas and South Carolina.
Industry seeks continued government support
Masafumi Senzaki, Chairman of the Japan Construction Machinery Industry Association and President of Hitachi Construction Machinery, welcomed the tariff reduction. He also thanked the Japanese government for seeking tariff exemptions.
Senzaki said the industry hopes the government will continue supporting free trade. He also urged authorities to provide assistance to member companies affected by the US tariff measures.
Note: This article has been written in accordance with a content exchange agreement between BigMint and Japan Metal Daily.
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