Toyota, the world’s largest automaker, has forecast a steep 35% drop in net profit for fiscal 2025–26, citing the impact of U.S. vehicle tariffs under former President Donald Trump’s renewed protectionist trade policies.
In a statement released Thursday, the Japanese car giant projected a net profit of 3.1 trillion yen ($21.6 billion) for the financial year beginning April 2025. This marks a sharp decline from the 4.8 trillion yen ($33.4 billion) profit it recorded in the previous year.
The automaker confirmed that it has “tentatively factored in” the estimated impact of U.S. tariffs imposed in April and May 2025, which include a 25% levy on imported vehicles and auto parts, such as engines and transmissions.
Toyota anticipates these tariffs will reduce operating profit by 180 billion yen ($1.25 billion) during the current fiscal year.
The new tariffs are part of a broader strategy by Donald Trump, who has accused Japan of exploiting trade relations by flooding the U.S. market with Japanese cars while American brands fail to penetrate Japan. Trump has publicly criticized the imbalance, stating, “They don’t take our cars, but we take MILLIONS of theirs!”
In response to industry pressure, Trump recently signed an executive order softening some of the overlapping levies, allowing importers to pay the higher of two duties (e.g., vehicle or raw material) rather than both. A two-year grace period was also announced to allow carmakers time to shift their supply chains back to the U.S.
Toyota maintained its position as the top global automaker, selling 10.8 million vehicles worldwide in 2024. In the U.S., it remains the second-best-selling car brand, moving over 2.3 million vehicles in 2024 alone. Comparatively, U.S. automakers face tougher conditions in Japan, with General Motors selling fewer than 1,100 vehicles in the country last year. Ford exited the Japanese market nearly a decade ago.
Industry analysts caution that the true financial toll of the tariffs is still difficult to predict. Takaki Nakanishi of the Nakanishi Research Institute noted that while automakers are trying to relocate production to the U.S., such transitions require time and massive investment.
Tatsuo Yoshida, an auto analyst with Bloomberg Intelligence, highlighted the broader national implications of Toyota’s forecast. “Toyota’s guidance is crucial. Without it, the entire supply chain in Japan would be left uncertain.”
Last year, automobiles made up 28% of Japan’s exports to the United States, underscoring the stakes for the country’s economy.
