Japanese companies are refraining from providing earnings forecasts because of the difficulty in determining the next changes in U.S. President Donald Trump’s tariff policy.

Trump has frequently altered course on which imported goods will be targeted by his levies, the rate of the tariffs, and when they will be imposed.

The uncertainty concerning the tariffs has made it extremely difficult for Japanese companies to determine the economic and financial impact.

“We’ve encountered different predictions for the tariff rate. We never know which rate will be imposed,” a senior official of major lens manufacturer Hoya Corp. said on May 1.

The official suggested that an earnings forecast now could prove meaningless, given the fluid situation.

“Our figures are uninformative without explaining the underlying assumptions,” the official said.

Noboru Saito, president of major electronic component manufacturer TDK Corp., also expressed frustration.

“We can’t change macroeconomics,” he said. “We can only focus on what we can take control of.”

TDK took the unusual step of offering two different earnings forecasts for fiscal 2025, which ends in March 2026.

Its “base scenario,” which does not take into account the impact of U.S. tariffs, predicts net income will increase by 1.7 percent year on year.

But its “risk scenario” forecasts net income to plunge by 19.2 percent due largely to reduced demand in the U.S market as the tariffs raise prices there.

Companies can protect their profits in the U.S. market by raising prices on products by the tariff rate, but this carries the risk of losing customers to competitors.

They are trying to determine how much of the tariffs they can add to the sales prices.

Alps Alpine Co., another electronics component manufacturer, predicts the tariffs will raise the prices of its products in the United States by 23 billion yen ($156 million) this fiscal year.

Alps Alpine CFO Satoshi Kodaira said the company intends to cover 5 billion yen of the 23 billion yen tariff cost and pass the remaining 18 billion yen on to customers.

CURRENCY MOVES

Due to Trump’s policies, the yen is strengthening against the dollar.

Many companies expect the Japanese currency to rise by 10 yen to around 140 yen per greenback for the current fiscal year.

The stronger yen would deal another blow to Japanese exporting companies.

SHIFT IN SUPPLY CHAINS

Many companies have adjusted their supply chains to mitigate the impact of Trump’s tariffs.

Electronics company Seiko Epson Corp. predicts the tariffs will add 17 billion yen to the cost of its products.

The company plans to transfer some of its manufacturing bases from China to the Philippines and Japan.

Major food company Morinaga & Co. has also increased exports from Taiwan to the United States while reducing exports from China.

Kawasaki Heavy Industries Ltd. said it has prepared to limit the impact of the tariffs on its motorcycle business.

“We have large factories in the United States. We plan to avoid risks by selecting the best manufacturing location depending on the situation,” Kawasaki Heavy President Yasuhiko Hashimoto said.

Some companies are making longer-term plans in the belief that the U.S. stance will not change anytime soon.

Hitachi Ltd. exports semiconductor manufacturing equipment from Japan to the United States. It also exports air compressors and their components from China to the U.S. market.

“I don’t think the current U.S. shift to domestic priority is a temporary thing,” Hitachi President Toshiaki Tokunaga said. “We want to further promote local production for local consumption and reduce business risks.”

However, relocating production facilities across borders takes time and money, and such moves could also affect business partners.

“We need to reconsider our supply chains, but simply shifting production to the United States is not enough,” said Kei Uruma, president of Mitsubishi Electric Corp. “If we move production bases to the United States and other companies do not follow suit, it will be difficult to produce in the United States.”

(This article was written by Kenichiro Shino and Takehiro Tomoda.)