Finance
Toyota warns of $9.5 billion tariff hit, slashes annual profit forecast
Published by Global Banking and Finance Review
Posted on August 7, 2025
3 min readLast updated: January 22, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on August 7, 2025
3 min readLast updated: January 22, 2026
Toyota anticipates a $9.5 billion tariff impact from US imports, leading to a 16% cut in its annual profit forecast. The company faces challenges from rising costs due to tariffs.
By Daniel Leussink
TOKYO (Reuters) -Japan's Toyota Motor said on Thursday it expected a hit of nearly $10 billion from President Donald Trump's tariffs on cars imported into the United States, the highest such estimate yet by any company, underscoring growing margin pressures.
The world's top-selling car maker also cut by 16% its forecast for full-year operating profit, reflecting challenges for global manufacturers grappling with rising costs from U.S. levies on cars, parts, steel and aluminium.
"It's honestly very difficult for us to predict what will happen regarding the market environment," Takanori Azuma, Toyota's head of finance, told a briefing, vowing to keep making cars for U.S. customers, regardless of tariff impact.
Azuma said the 1.4 trillion yen ($9.50 billion) estimate also includes fallout suppliers are facing, particularly those in the U.S. importing parts from Japan, though he declined to say how much of the total was attributable to that.
Rivals have reported smaller tariff hits so far: GM has projected one of $4 billion to $5 billion for the year, while Ford expects a $3-billion hit to full-year gross revenues.
Jeep maker Stellantis said tariffs were expected to add $1.7 billion in expenses for the year.
Toyota cut its operating profit forecast for the financial year to end-March 2026 to 3.2 trillion yen ($21.7 billion), down from a previous outlook of 3.8 trillion yen.
It had previously estimated a tariff hit of 180 billion yen for April and May, but that was solely for the impact from tariffs on Toyota's vehicles. It had not issued a full-year projection until now.
For the first quarter from April to June, Toyota reported an operating profit of 1.17 trillion yen, down from 1.31 trillion a year earlier, but above the 902 billion average of seven analyst estimates compiled by LSEG.
Toyota's North American business swung to an operating loss of 63.6 billion yen in the first quarter, from profit of 100.7 billion a year earlier, as it took a hit of 450 billion from the tariffs.
Its broad production operations, which include U.S., Canadian, Mexican and Japanese plants, expose it to tariffs not only on direct exports but also on vehicles and parts shipped across borders within North America.
Last week, the automaker said it turned out some 1.1 million Toyota and Lexus brand vehicles in North America in the first six months of 2025, including more than 700,000 in the United States.
TRADE DEAL
The first-quarter results highlight the pressure U.S. import tariffs are putting on Japanese automakers, even as a trade pact between Tokyo and Washington offers potential relief.
Under the deal agreed last month, Japanese auto exports into the United States would face a 15% tariff, down from levies totalling 27.5% previously. But a timeframe for the change has yet to be unveiled.
Last week, Toyota reported record global output and sales for the year's first half, driven by strong demand in North America, Japan and China, including that for petrol-electric hybrid vehicles.
Toyota also announced on Thursday a plan to build a new vehicle factory in Japan, where car sales have been falling due to a shrinking population and declining ownership.
Toyota said it planned to start operations early next decade at the new plant, but has yet to decide production models.
The company's shares ended down 1.5% after the earnings release.
($1=147.2300 yen)
(Reporting by Daniel Leussink; Editing by Tom Hogue and Clarence Fernandez)
Toyota expects a hit of nearly $10 billion from U.S. tariffs on imported cars, with an estimate of 1.4 trillion yen ($9.50 billion).
Toyota has cut its operating profit forecast for the financial year to 3.2 trillion yen ($21.7 billion), down from a previous estimate of 3.8 trillion yen.
Japanese automakers, including Toyota, are grappling with rising costs due to U.S. import tariffs, impacting their financial performance.
A recent trade pact between Tokyo and Washington is expected to reduce tariffs on Japanese auto exports to the U.S. from 27.5% to 15%, although the implementation timeline is unclear.
Toyota announced plans to build a new vehicle factory in Japan, aiming to start operations early next decade, although specific production models have yet to be decided.
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