Toyota slashes profit forecast by nearly $10B over Trump's tariffs
What's the story
Toyota Motor Corporation has revised its full-year operating profit forecast downward by 16%. The world's largest automaker now expects a major $9.5 billion hit from US tariffs on imported cars. The company is also dealing with rising material costs and a strengthening yen. Despite a bilateral trade agreement that could ease some of the pressure, the uncertainty over tariff implementation timelines continues to weigh heavily on Japanese automakers.
Financial adjustment
Toyota has revised operating profit forecast for the financial year
Toyota has revised its operating profit forecast for the financial year ending March 2026, now estimating it at ¥3.2 trillion ($21.7 billion). This is a reduction from its earlier projection of ¥3.8 trillion. The company expects US tariffs to cut its profits by as much as ¥1.4 trillion ($9.5B) over the full year. Earlier, Toyota had projected a ¥180 billion impact for April and May, but this is the first time it has issued a full-year forecast.
Trade impact
First-quarter results show the impact of US trade policies
The pressure of US import tariffs on Japanese automakers is evident in Toyota's first-quarter results. The company posted an operating profit of ¥1.17 trillion for the April-June quarter, down from last year's ¥1.31 trillion but higher than the average estimate of ¥902 billion by seven analysts surveyed by LSEG. This highlights how US trade policies are affecting profits and performance in Japan's automotive industry.
Trade deal
Tokyo-Washington trade deal offers some hope, but uncertainty remains
A bilateral trade agreement between Tokyo and Washington could provide some relief from US import tariffs. Under this deal, Japanese auto exports to the US would be subject to a 15% tariff instead of the previous total levies of 27.5%. However, there is still no word on when these changes will come into effect. This uncertainty continues to add pressure on Japanese automakers like Toyota.