Lower Section 232 tariffs benefit Japanese construction machinery manufacturers

Overview

This report discusses the presidential proclamation announced by the White House in the early morning of June 2, 2026 Japan time: revising Section 232 tariff arrangements related to steel and aluminum, lowering the applicable tariff rates on some agricultural machinery, tractors, and construction machinery imports, and expanding the industrial machinery categories covered by the 15% rate. Goldman Sachs believes that Japanese exports of tractors and construction machinery to the United States will see tariffs reduced from 25% to 15%, which is broadly positive for Japanese construction machinery manufacturers.

Core views

The core view is that the tariff reduction should help improve the cost or price competitiveness of Japanese construction machinery manufacturers' exports to the U.S., but the short-term financial contribution will not be fully reflected immediately. The new rate applies to goods arriving on or after June 8, 2026, while these products are expected to be sold externally only in November to December 2026 or later, limiting the impact in the current fiscal year. At the company level, Goldman Sachs estimates Komatsu's potential earnings impact in the current fiscal year at about +?10 bn, while the impact on Kubota and Takeuchi Manufacturing is limited; the full contribution is expected from FY2027 onward.

Analysis framework

The report follows a policy event-driven industry impact assessment approach, first identifying the tariff rates, categories, countries, and effective timing involved in the White House announcement, and then combining freight flow and sales recognition lags to judge the earnings impact on Japanese construction machinery manufacturers in the current and next fiscal years. The appendix also discloses research framework explanations used in Goldman Sachs research, including GS Factor Profile, M&A Rank, and Quantum.

Methodology notes

• Policy impact assessmentSection 232 tariff change impact analysis

  Compare old and new tariff rates, applicable categories, effective dates, and expiration dates, and assess the earnings impact in combination with arrival and sales recognition timing.

  This report treats the tariff reduction from 25% to 15% as a positive cost variable, but emphasizes that the new rate applies only to goods arriving on or after June 8, 2026, and that the lag in actual external sales limits the contribution to FY2026.

• Equity attribute frameworkGS Factor Profile

  Compare equity attributes across four dimensions: growth, financial returns, valuation multiples, and composite percentile.

  The appendix explains that growth is usually based on forward sales, EBITDA, and EPS growth; financial returns are based on ROE, ROCE, and CROCI; valuation multiples are based on metrics such as P/E, P/B, dividend price ratio, EV/EBITDA, and EV/FCF; and the composite percentile combines growth, financial returns, and low valuation dimensions.

• M&A scenario frameworkM&A Rank

  Use a score from 1 to 3 to assess the probability that a covered company becomes an acquisition target.

  The appendix explains that M&A Rank 1 represents high probability, 2 represents medium probability, and 3 represents low probability; Rank 1 or 2 may be included in target price factors, while Rank 3 is usually considered unimportant.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Komatsu

  A Japanese construction machinery manufacturer for which the report explicitly estimates the current fiscal year potential earnings impact.

  Strengths

  The tariff cut from 25% to 15% is expected to improve the cost and competitiveness of construction machinery exports to the U.S., and the report provides a relatively clearer estimate of the current fiscal year potential earnings impact.

  Weaknesses

  Even after goods arrive under the new tariff rate, external sales recognition still takes time, so the current fiscal year contribution is constrained by the timing lag.

  Comparison

  Compared with Kubota and Takeuchi Manufacturing, the report provides a more specific earnings impact estimate for Komatsu.

  Risks

  Policy expiration, differences in execution across applicable categories, changes in U.S. demand, and exchange-rate fluctuations may affect actual profit transmission.

• Kubota

  A Japanese manufacturer involved in tractors and agricultural machinery, benefiting from lower tariffs on agricultural machinery.

  Strengths

  Lower tariffs on categories such as tractors, combine harvesters, and harvesters help ease the tariff burden on exports to the U.S.

  Weaknesses

  The report judges the current fiscal year impact to be limited, with short-term profit elasticity less significant than the policy direction may suggest.

  Comparison

  Compared with Komatsu, Kubota's current fiscal year earnings impact is described as limited in this report.

  Risks

  Actual benefits depend on shipments qualifying for the new tariff rate, arrival timing, sales pace, and U.S. agricultural machinery demand.

• Takeuchi Manufacturing

  A Japanese construction machinery manufacturer that may benefit from lower tariffs on mobile industrial equipment and construction machinery.

  Strengths

  Lower tariffs on construction machinery-related categories create a positive change for exports to the U.S.

  Weaknesses

  The report says its current fiscal year impact is limited, with no obvious short-term financial contribution.

  Comparison

  Compared with Komatsu, Takeuchi Manufacturing has a smaller short-term earnings impact in this report.

  Risks

  Applicable product scope, lagged sales recognition, U.S. end demand, and policy duration limits may reduce the magnitude of the benefit.

• Japanese construction machinery manufacturers overall

  The main industry group benefiting from the policy change.

  Strengths

  The applicable tariff rate on exports to the U.S. for tractors, hydraulic excavators, loaders, bulldozers, and others is reduced, which is directionally positive overall.

  Weaknesses

  There is a lag of several months from arrival to external sales, so the short-term financial impact is slower to appear.

  Comparison

  The industry benefits overall, but elasticity across companies depends on U.S. exposure, product mix, and shipment timing.

  Risks

  Policy expiration at the end of 2027, changes in execution standards, intensified competition, and exchange-rate fluctuations may all affect the final benefit.

Key data

• Announcement time2026-06-02 (early morning Japan time)The White House issued a presidential proclamation revising Section 232 tariffs related to steel and aluminum.
• New tariff effective date2026-06-08 (U.S. Eastern Time)The new tariff rate applies to relevant goods arriving on or after this date.
• Policy expiration date2027-12-31The announcement said the changes are intended to encourage near-term investment to rebuild the U.S. industrial base and are scheduled to expire on this date.
• Original tariff rate25%The original tariff level applicable to some agricultural machinery, tractors, and construction machinery.
• New tariff rate15%Applicable to relevant imported categories such as combine harvesters, harvesters, tractors, and certain mobile industrial equipment.
• Komatsu current fiscal year potential earnings impactabout +?10 bnThe original text reads “c.+?10 bn”; the currency symbol contains OCR recognition noise, so the uncertain symbol is retained.
• Full contribution timingfrom FY2027 onwardGoldman Sachs expects the full contribution for all relevant companies to be reflected starting in FY2027.

Impact & implications

This policy change reduces the tariff burden on Japanese manufacturers exporting tractors and construction machinery to the United States, which in theory can improve price competitiveness, profit margins, or order-taking ability. Due to timing gaps among the effective date, arrival batches, and sales recognition, the near-term effect is more of a positive catalyst for future earnings rather than something that will be fully reflected immediately in current fiscal year profits. For investment judgment, it is necessary to distinguish between the direction of the policy tailwind and the timing of financial realization.

Risks

• The policy is effective until December 31, 2027; if it is not extended, the durability of the benefit will be limited.
• The new tariff rate applies only to goods arriving on or after June 8, 2026, with actual external sales lagging to November-December 2026 or later.
• The announcement covers specific countries and equipment categories; changes in scope or implementation details could affect earnings elasticity.
• The research is based on currently public information, and views, estimates, and forecasts may change.
• Exchange-rate fluctuations, U.S. end demand, and competitive pricing may weaken the profit transmission from lower tariffs.

What to watch

• The actual applicable tariff rates and customs execution for batches arriving after June 8, 2026.
• U.S. channel inventory digestion and the pace of external sales recognition after November-December 2026.
• Revisions by Komatsu, Kubota, and Takeuchi Manufacturing to FY2026 and FY2027 earnings guidance.
• Whether Section 232 applicable categories continue to expand to more mobile industrial equipment.
• Signals of policy extension or adjustment before the end-2027 expiration.