Toyota, the world’s largest carmaker by sales volumes, has cut its annual operating profit forecast by over $4 billion due to the impact of US tariffs and other factors. The company revised its full-year operating income forecast down 600 billion yen to 3.2 trillion yen.
The decision comes as Japanese automakers face significant pressure from US President Donald Trump’s 25% tariffs on imported vehicles, which came into effect in April. Peers such as Honda have also reported a drop in profit, with the companies cutting prices to maintain market share in the US.
Despite this challenging external environment, Toyota has seen strong global demand and reported record worldwide sales in the first half of the year. The company attributed its weaker operating income to the impact of US tariffs and exchange rate fluctuations, as well as increased expenses.
Automotive analyst Abhik Mukherjee notes that while vehicle export volumes to the US held up, the higher costs from tariffs had to be partially absorbed, squeezing margins. However, with the new Japan-US trade deal expected to reduce tariffs to 15%, Toyota expects a full financial year impact of 1.4 trillion yen on profits.
The move is seen as a positive step for Japanese automakers, which may gain an edge over NAFTA-region competitors that still face higher tariffs. Auto exports to the US are a cornerstone of Japan’s economy, making up about 24% of its global auto shipments in 2024.
Source: https://www.cnbc.com/2025/08/07/toyota-motor-june-quarter-profit-.html