Toyota slashes forecast as US tariffs threaten $9.5 billion hit
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Toyota lowered its annual forecast amid impending US tariffs on automotive imports.
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Toyota Prius cars are driven from the production line at the company’s Tsutsumi assembly plant in Toyota City, Japan, in 2018. (AFP/Getty Images)
Toyota Motor Corp. has revised its financial forecast downward for the fiscal year ending March 2026, warning of a substantial ¥1.4 trillion ($9.5 billion) reduction in operating income due to new US tariffs on imported vehicles.
The world’s largest carmaker now expects ¥3.2 trillion ($2.17 billion) in operating income, a sharp decline from the previous forecast of ¥3.8 trillion ($2.7 billion). The new outlook also falls short of analyst expectations. Despite this, Toyota posted stronger-than-expected earnings for the April to June quarter, recording an operating income of ¥1.17 trillion, well above analysts’ projection of ¥890 billion.
The revision highlights the significant financial strain imposed by recent US tariffs. Toyota said these tariffs cost the company ¥450 billion in the first quarter alone and are projected to total ¥1.4 trillion by the end of the fiscal year. This is the company's first comprehensive estimate since it initially flagged a ¥180 billion impact from April and May.
Toyota shares dipped 1.1% on Thursday in Tokyo following the announcement.
Under a new trade agreement reached last month, Japanese automakers now face a 15% tariff on vehicles exported to the US. The deal also includes provisions for Japan to establish a $550 billion American investment plan.
Despite tariff hit, hybrid sales drive record growth
While the final duty rate is lower than the 25% initially feared within the industry, uncertainty remains around the agreement’s full implementation. US President Donald Trump also stated that Japan has agreed to accept imports of Ford Motor Co.’s F-150 pickup trucks, suggesting unresolved tensions regarding the trade pact’s interpretation.
Toyota responded to the agreement in July by expressing hope for improved US-Japan relations and advocating for further reductions in tariffs.
Even amid mounting trade barriers, Toyota achieved record global sales during the first half of 2025, driven by rising demand for its gas-electric hybrid models. The company sold 5.5 million units between January and June, marking a 7.4% increase from the same period last year.
Growth was especially strong in core markets including the US, Japan, and China, reinforcing the brand’s resilience despite external pressures.
