Toyota Warns of Record $9.5 Billion Profit Blow from U.S. Tariffs

Toyota Motor Corporation, the world’s largest carmaker, has cautioned that U.S. import tariffs could slash its annual operating profit by as much as 1.4 trillion yen ($9.5 billion) – the steepest projected impact disclosed by any automaker to date.

The Japanese giant also lowered its full-year profit outlook by 16%, now forecasting 3.2 trillion yen ($21.7 billion) for the year ending March 2026, down from 3.8 trillion yen. Rising costs from tariffs on cars, auto parts, steel, and aluminum are weighing heavily on global manufacturers, with Toyota warning that the scale of the disruption is still hard to gauge.

“It’s difficult to predict how the market environment will evolve,” said Takanori Azuma, Toyota’s chief financial officer, adding that the company will continue producing for U.S. customers despite the financial strain.

Toyota’s North American operations posted a quarterly operating loss of 63.6 billion yen, reversing a 100.7 billion yen profit a year earlier, largely due to a 450 billion yen tariff-related hit. The company’s supply chain – which spans Japan, the U.S., Canada, and Mexico – has been particularly exposed to cross-border duties on both vehicles and components.

Rivals have reported smaller tariff impacts, with General Motors projecting $4–$5 billion in costs, Ford expecting a $3 billion hit, and Stellantis anticipating an extra $1.7 billion in expenses this year.

Toyota produced 1.1 million Toyota and Lexus vehicles in North America in the first half of 2025, including more than 700,000 in the United States. While a recent U.S.–Japan trade agreement could eventually lower tariffs on Japanese car exports from 27.5% to 15%, the timeline for implementation remains unclear.

The tariff concerns come despite record global output and sales in the first six months of the year, bolstered by demand in North America, Japan, and China – particularly for hybrid models. Toyota has also revealed plans for a new manufacturing plant in Japan, scheduled to begin operations early next decade, as domestic sales decline due to a shrinking population and reduced car ownership.

Following the earnings announcement, Toyota shares closed 1.5% lower on Thursday.