U.S.-Japan trade deal improves outlook for Japanese OEMs

This week’s trade deal between the United States and Japan spells good news for Japanese heavy equipment manufacturers, as share prices improved, but they still face other challenges. 

OEMs Komatsu, Kubota and Hitachi saw their share prices rise by at least 3% on July 23, the day the Trump administration announced a deal to lower tariffs to 15% from 25% on some Japanese goods, such as autos, commercial vehicles, equipment and parts. 

In addition, Japan’s Nikkei stock index gained 3.5% that day for its highest close since July 2024. The index gained an additional 1.6% on July 24.

Komatsu, Kubota, Hitachi stocks rise

Heavy equipment manufacturer Komatsu forecasts a savings of between $150 million and $200 million under the trade agreement, Graeme McDonald, heavy equipment analyst at Citi, told Equipment Finance News. Komatsu manufactures about half of the products it sells in the United States domestically, while it imports the rest from Japan, Thailand, and Brazil.

Shares of Komatsu (OTCS: KMTUY) gained 6.8% to $36.47 as of market close on July 23. Shares were up 1.3% to $36.93 as of market close July 24. The company has a market capitalization of $33.42 billion.

Agriculture and construction equipment manufacturer Kubota is also expected to lower its tariff costs by between $150 million and $200 million, as 70% of its products sold in the U.S. are imported from Japan, McDonald said. The trade agreement should also result in more Kubota products being manufactured in the U.S. 

Shares of Kubota (OTCS: KUBTY) gained 10.6% to $60.36 as of market close on July 23. Shares were down 1.95% to $59.18 as of market close on July 24. Kubota has a market capitalization of $13.64 billion.

Hitachi manufactures all U.S.-sold equipment in Japan and now estimates the effect of tariffs at between $150 million from $200 million, McDonald said. 

Shares of Hitachi Construction Machinery Co. (OTCS: HTCMY) gained 2.96% to $61.26 as of market close on July 23, with the last stock update coming July 23 at 8:00 p.m. EDT. It has a market capitalization of $7.65 billion.

Outside of the heavy equipment OEMs, the Tokyo Stock Exchange’s TOPIX transport equipment index, which includes truck and other equipment manufacturers such as Hino Trucks, Isuzu Trucks, Kawasaki Heavy Industries, Mitsubishi and Toyota, rose 11% on July 23 and 0.2% on July 24. 

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