Toyota Motor Corporation has issued a stark warning about its financial outlook, revealing that U.S. tariffs have already cost the company $1.3 billion in just two months, with more uncertainty ahead.
The world’s largest automaker had enjoyed a record-breaking performance just a year earlier. Strong sales of hybrid models in the U.S. and a weak yen helped Toyota post the biggest annual profit in Japanese corporate history. But that momentum has been cut short, as the company now predicts a 20% drop in operating profit for the fiscal year ending next March.
The turnaround stems in large part from the 25% tariffs imposed by President Donald Trump on imported vehicles and parts. The duties took effect in April and were expanded to include auto parts in May. Toyota’s top executives say the losses tallied so far are limited to just those two months—and they expect the situation to remain unpredictable.
At a press conference, CEO Koji Sato acknowledged the uncertainty facing the auto sector, pointing to a volatile trade environment and shifting U.S. policies. The company has refrained from estimating future tariff-related costs beyond May, calling it too difficult to forecast given the changing nature of trade relations.
The impact of these tariffs isn’t limited to Toyota. Japanese automakers as a whole are feeling the pressure, as autos and parts represent Japan’s most valuable exports to the U.S. Despite a temporary pause on a broader tariff package targeting Japanese imports, the damage from auto-specific duties is already apparent.
For Toyota, the timing couldn’t be worse. The company is grappling with additional challenges including a stronger yen, which reduces the value of overseas earnings. The pressure from Washington has only added to the stress, as Japan’s government tries to navigate tough trade talks with the Trump administration.
The Trump White House has adopted an aggressive trade stance since the beginning of the year, with repeated threats and actions targeting Mexico, Canada, and Japan. In recent weeks, the president rejected calls to delay auto tariffs, dismissing concerns that they would raise car prices for American consumers.
Toyota’s experience highlights the growing disconnect between global supply chains and protectionist trade policies. Automakers depend on complex international logistics to keep costs down and production efficient. The tariffs disrupt that balance, forcing companies to recalculate investments and possibly relocate production—at a high cost.
For now, Toyota says it is monitoring the situation closely and working to adapt, but the road ahead looks bumpy. With more trade policy shifts potentially on the horizon, one of the auto industry’s biggest players is bracing for a year of financial strain and strategic uncertainty.