Denso eyes price negotiations, not panic, against Trump's tariffs

DENSO

31/01/2025 12:17

By Daniel Leussink
       TOKYO, Jan 31 (Reuters) - The world's second-largest car
parts maker is not unduly worried about U.S. President Donald
Trump's looming tariffs on Mexico and Canada, and may seek to
manage increased costs by raising prices, a top executive at
Japan's Denso  6902.T  said on Friday.
    Yasushi Matsui, the Toyota Motor  7203.T  supplier's
financial officer, provided insight into how some of Japan's
biggest corporations aim to navigate potential higher import
taxes in the U.S. 
    His comments also highlighted the possible impact of Trump's
trade policies on global automakers and consumers by disrupting
the supply chain.
    Trump has set a Saturday deadline to impose 25% tariffs on
imports from Mexico and Canada to pressure the two largest U.S.
trading partners into taking action to prevent illegal migrants
and shipments of fentanyl from crossing their borders into the
U.S.
    "Rather than panicking and making a fuss, we want to proceed
with ... sound price transfers where possible," Matsui said at a
financial results briefing. 
    "We want to discuss proper price transfers rather than just
having the supply chain absorb everything," he added, indicating
that he was hopeful about holding price negotiations with
customers if tariffs were raised.
    Denso reported a near sixfold jump in third-quarter
operating profit on Friday. Its performance is an indicator for
Toyota, due to report earnings on Wednesday, as it reflects
broader trends in the global automotive supply chain.
    Another Toyota supplier, car interiors maker Toyota Boshoku
 3116.T , is closely watching the situation, an executive said. 
    "We'll firmly have our antennas up since tariffs could
affect customer behaviour," chief financial officer Shunichi
Iwamori said at a separate results briefing, indicating a
willingness to discuss passing on higher prices. 
    Denso and Toyota Boshoku, among other suppliers, prefer
making goods near their customers, in the North American market.
They say that could provide some cover from tariffs.
    Denso's Matsui said the company would consider the overall
impact of Trump's economic policy package and not just import
taxes. 
    Higher tariffs on Mexico would likely weaken the country's
peso currency, he said.
    "A weaker peso would actually be favourable for profits,"
Matsui said.
    "Additionally, since President Trump is expected to
implement corporate tax cuts, there should be positive effects
from that as well."
    

 (Reporting by Daniel Leussink, Editing by Louise Heavens)
 ((daniel.leussink@thomsonreuters.com; Twitter:
@danielleussink;))