Toyota wrestles with U.S. tariffs warns of profit squeeze
Japan’s Toyota Slashes Annual Profit Forecast Amid U.S. Tariffs
Japanese automaker Toyota Motor Corp. has revised its 2025 net‑profit forecast downward by 14 percent after the U.S. administration raised tariffs on imported Japanese cars. The global sales leader now expects a net profit of 2.66 trillion yen ($18.06 billion), down from the previously projected 3.10 trillion yen.
Key Factors Behind the Forecast Cut
- U.S. Tariff Impact – A 25 percent duty imposed by the Trump administration in April has markedly reduced Toyota’s operating income.
- Recent Trade Agreement – Washington and Tokyo announced a July deal that will lower the tariff to 15 percent, but the effective start date and whether the levy will be capped remain unclear.
- Existing “Reciprocal” Levies – Alongside the 2.5 percent pre‑existing duty, other reciprocal tariffs could add to the 27.5 percent total that Toyota is currently facing.
Share Movement
In Tokyo’s afternoon trade, Toyota’s shares fell by as much as 2.4 percent before recovering toward the lows.
Quarterly Results – First Fiscal Quarter
- Revenue – Up 3.5 percent to 5.34 trillion yen.
- Net Income – Plunged by 36.9 percent to 196.67 billion yen ($1.3 billion).
Industry Comparison
- Honda – Net profit in the first quarter fell 50.2 percent year‑on‑year to 196.67 billion yen, while revenue dipped 1.2 percent. Honda upgraded its annual forecast after the Washington deal.
- Japan’s Automotive Landscape – Honda, Japan’s second‑largest automaker, has built the highest percentage of U.S. sales (over 60 percent), whereas rivals like Nissan are tightening jobs and closing factories.
- German Carmakers – BMW – BMW maintained its 2025 targets despite a one‑third drop in quarterly profits, arguing that its large American operations shield it from tariff shocks. Volkswagen and Mercedes‑Benz, in contrast, cut their outlooks.
Ford’s Outlook
Ford has projected a full‑year earnings hit of approximately $2 billion due to the U.S. levies.
