Photo Credit: AFP
Japanese auto giant Toyota predicted a 35 percent year-on-year drop in net profit for 2025-26 on Thursday, citing the impact of President Donald Trump's vehicle tariffs among other factors. The company, and other carmakers, have been among the most heavily impacted by the US president's multi-pronged assault on free trade, including tariffs on finished imported cars and auto parts.
For the current financial year that began in April, Toyota now forecasts net profit of 3.1 trillion yen ($21.6 billion).
"The estimated impact of US tariffs in April and May 2025 have been tentatively factored in," the world's top-selling automaker said in a statement. The company logged net profit of nearly 4.8 trillion yen in the 12 months to March, down 3.6 percent year-on-year but beating its forecast issued in February. As of this month, it estimated the tariffs would impact 2025-2026 operating profit to the tune of 180 billion yen.
Automobiles accounted for around 28 percent of Japanese exports to the United States last year. Trump late last month moved to soften the details of his tariffs on automakers -- signing an executive order to limit the impact of overlapping levies on firms.
Trump's new policy means a company would not face the 25 percent levy for an imported vehicle and 25 percent on steel or aluminum; the importer would pay the higher of the two but not both, a US commerce official said.
The president also released a proclamation that gives the industry a two-year grace period to move supply chains back to the United States.
Toyota sold 10.8 million vehicles worldwide in 2024, holding onto its crown as the world's top-selling automaker.
Trump last month hit out at the wide difference between Japanese car exports to the United States and those going the other way. Toyota is the second-top-selling automaker in the United States, where it shifted more than 2.3 million vehicles last year, while US industry leader General Motors sold just 587 Chevrolets and 449 Cadillacs in Japan.
Ford pulled out of the tough Japanese market nearly a decade ago. "They don't take our cars, but we take MILLIONS of theirs!" Trump said in April, accusing Japan of treating its ally "very poorly on trade".
