Toyota Hit by US$2 Billion Tariff Loss, Cuts Profit Forecast 16%

Toyota reported a US$2.9 billion hit from US tariffs in its fiscal first quarter, prompting  a 16% cut to its full-year profit forecast and raising industry-wide alarm over the mounting cost of trade restrictions. The loss marks the largest tariff-related quarterly hit by any automaker to date.

In its April–June 2025 results, Toyota said net income fell nearly 40%, while operating income dropped 11% to US$7.9 billion. The company attributed the losses directly to US tariff measures affecting imports from Japan, despite an announced bilateral trade deal.

Toyota warned total tariff costs for the fiscal year could reach US$9.5 billion but will not raise US vehicle prices, opting instead to absorb the impact to protect market share. “We continue to prioritize our US operations and customer base,” a spokesperson said.

The Japan-US trade deal announced earlier this year proposed cutting automotive tariffs from nearly 30% to 15%, but with no set implementation date, uncertainty persists. “It is still not clear to us when the change will take effect,” said Nissan CEO Ivan Espinosa.

Industry-wide, automakers have already faced nearly US$12 billion in cumulative tariff costs, according to the Wall Street Journal. Companies are responding with price hikes, supply chain shifts, and accelerated US investment, though each carries its own risks.

Despite the headwinds, Toyota’s US sales remain strong, with global deliveries up 6% and electrified vehicle sales rising 17%. The company continues to expand its US manufacturing footprint to cushion the impact of trade policy uncertainty. The White House has said the deal will be reviewed every 90 days, leaving automakers braced for prolonged volatility—especially smaller Japanese suppliers with less room to absorb costs.

Toyota acknowledged its current strategy may not be sustainable if tariffs persist. “It is honestly very difficult for us to predict the market environment,” said CFO Takanori Azuma, reaffirming Toyota’s commitment to its US customers.

For the full year, Toyota expects the US$9.5 billion hit  to include both its own costs and supplier losses, particularly among US-based firms importing parts from Japan. Competitors project smaller impacts: GM sees US$4–5 billion, Ford US$3 billion, and Stellantis US$1.7 billion in additional tariff-related expenses.