Key facts
- Toyota Motor is becoming increasingly reliant on the U.S. market for sales.
- The company expects a $9.5 billion hit from U.S. tariffs on cars imported to the U.S.
- Toyota cut its operating profit forecast for the financial year by 16 percent.
- Toyota's North American business swung to an operating loss in the first quarter.
- A new vehicle factory is planned for Japan.
Toyota Motor is facing increasing financial pressure due to its growing reliance on the U.S. market, making it vulnerable to policy shifts under President Donald Trump. The Japanese automaker anticipates a significant $9.5 billion impact from U.S. tariffs on imported cars and parts, the largest such hit of any company to date.
This forecast led Toyota to cut its operating profit projection for the fiscal year by 16 percent, to 3.2 trillion yen ($21.7 billion), down from a previous outlook of 3.8 trillion yen ($25.7 billion). The company's North American operations swung to an operating loss of 63.6 billion yen ($431.3 million) in the first quarter, a reversal from a profit of 100.7 billion yen ($682.9 million) a year prior, largely due to a $3 billion hit from tariffs.
Toyota's extensive production network across North America and Japan exposes it to tariffs not only on direct exports but also on vehicles and parts traded within the region. In the first six months of 2025, Toyota produced approximately 1.1 million Toyota and Lexus vehicles in North America, with over 700,000 in the U.S.
Other automakers are also feeling the pinch of U.S. import tariffs. Stellantis expects $1.7 billion in tariff-related expenses, General Motors projects $4 billion to $5 billion, and Ford anticipates a $3 billion hit. Ford reported an $800 million impact from tariffs in its second quarter.
While a recent trade pact between Tokyo and Washington offers potential relief by reducing tariffs on Japanese auto exports to the U.S. from 27.5 percent to 15 percent, a timeline for this change has not yet been announced. Despite these challenges, Toyota reported record global output and sales for the first half of the year, driven by strong demand in North America, Japan, and China, particularly for hybrid vehicles. The company also announced plans to build a new vehicle factory in Japan, expected to begin operations early next decade.
On Wall Street, Toyota's stock has declined by 1.6 percent following the downward revision of its earnings forecast.