On Thursday, Japanese automotive giant Toyota saw a 35% year-on-year decline in net profit for the current fiscal year, citing Donald Trump’s vehicle rates, among other factors.
Automakers have taken the hardest hit by the US president’s multifaceted attack on free trade.
On Saturday, the Trump administration imposed similar obligations on auto parts, including engines and transmissions, in addition to the 25% tariffs already imposed on completed imported vehicles.
For the fiscal year 2025-26, which began in April, Toyota is currently forecasting a net profit of 3.1 trillion yen ($21.6 billion).
“The estimated impacts of US tariffs for April and May 2025 are being considered tentatively,” the world’s top selling automaker said in a statement.
The company recorded a net profit of approximately 4.8 trillion yen on March 31 in 12 months, down 3.6% from the previous year, but breached forecast issued at 4.5 trillion yen in February.
As of this month, we estimated that tariffs would affect operating profits from 2025-2026 to 180 billion yen.
When asked about the longer-term impact of tariffs, Toyota CEO Sato told reporters that the situation is “hard to predict right now.”
“Currently, US tariffs are negotiated between governments, and details are still in fluidity,” he said.
Toyota exports 500,000 vehicles from Japan to the US every year, Sato said.
“So we are adjusting our cargo in the short term… in the medium to long term, we pursue local development of products that are tailored to our local customers.”
However, the company aims to maintain production in Japan with 3 million vehicles each year, he said, “from the perspective of earning foreign currency by protecting the supply chain and exporting it.”
“Benchmark” prediction
Toyota’s shares fell 1.3% after earnings were announced.
The “influence and position” of the automaker means that its profit forecasts are closely monitored in Japan, Bloomberg Intelligence’s auto analyst Yoshida told AFP.
“If Toyota doesn’t issue any kind of benchmark, the nation, including its suppliers, is at a loss,” he said ahead of Thursday’s results.
Automobiles accounted for around 28% of Japan’s exports to the US last year.
Trump moved late last month to ease details of his tariffs on the automaker. This adjusted the executive order to limit the impact of overlapping taxation on businesses.
The president has also issued a declaration that gives the industry a two-year grace period to bring the supply chain back to the United States.
Toyota sold 10.8 million vehicles worldwide in 2024, holding the crown as the world’s top selling automaker.
“Automobile manufacturers are doing what they can when trying to move production to the US despite the fact that production takes time (quickly) no significant changes,” Takaki of Nakanishi Research Institute, an automotive consulting firm, told AFP.
Last month, Trump hit a wide range of differences between going in the opposite direction from Japan’s export of automobiles to the US.
Toyota has shifted more than 2.3 million vehicles last year and sold US industry leader General Motors in Japan, the second-selling car manufacturer in the United States, shifting more than 2.3 million vehicles last year.
Experts say that Japan’s narrow roads (small for many US models) and the reputation of Japanese cars for quality and fuel efficiency are several reasons for this.
“They don’t have our cars, but we’ll take millions of theirs!” Trump said in April that he accused Japan of treating its allies “very poorly in trade.”
This story was originally featured on Fortune.com.
