Toyota slashes profit forecast as US tariffs surge

Japanese Auto Titans Reassess 2025 Outlook Amid US Tariff Uncertainty

Toyota Cuts 2025 Net Profit Forecast by 14%

• Projected Net Profit – ¥2.66 trillion (≈$18.06 billion) versus ¥3.10 trillion last forecast.
• Primary Drivers – US tariffs, underlying operational income decline.
• Market Impact – Shares dipped 2.4 % in Tokyo before recovering.

STAGE OF US‑Japan Trade Deal

• April 2024 – Trump imposed a 25 % levy on Japanese car imports.
• July 2025 – Tokyo–Washington announced a tariff drop to 15 %.
• Key Questions – When will the reduced rate take effect? Will the tariff cap stay at 15 % or stack on the pre‑Trump levy?
• Existing 2.5 % import tariff means the current total sits at 27.5 %.

Other Japanese Automakers Respond

• Honda – Net profit halved in Q1 due to tariffs, though it upgraded its annual forecast after the US‑Japan deal.
• First‑quarter net profit – ¥196.67 billion (+50.2 % YoY decline).
• Revenue – ¥5.34 trillion (−1.2 % YoY).
• Competitive Edge – >60 % of US sales are produced in the U.S., the highest among Japanese automakers.
• Nissan – Posted a net loss of ¥116 billion (≈$784 million) in Q1; it is cutting jobs and closing factories.
• BMW – Maintained 2025 targets despite a one‑third drop in quarterly profits; its large American operations helped buffer the tariff hit.
• Volkswagen & Mercedes‑Benz – Slashed outlooks due to Trump’s hard‑ball trade policy fallout.
• Ford – Forecasted a $2 billion full‑year earnings hit from the levies.

Key Takeaway

Japan’s largest automakers are recalibrating 2025 profit forecasts as the U.S. tariff landscape evolves. While some firms are upgrading outlooks after the trade deal, others are tightening predictions, reflecting the continued volatility of U.S. import tariffs and their ripple effect across the global auto industry.