Toyota issued a report on Thursday estimating that the significant tariffs proposed by President Trump, including those on automobile imports, could lead to a $1.3 billion drop in profits for the months of April and May.
This year, Trump suggested a 25% tariff on imported vehicles and auto parts. Being a Japanese-owned entity, Toyota will be affected by these vehicle taxes.
As of late April, the U.S. stated that foreign auto parts would face dual impacts from the car tariffs as well as additional duties on metals like steel and aluminum.
The White House indicated that automakers could apply for a 15% price offset in the inaugural year of these tariffs and a 10% offset in the second year. The intention behind Trump’s tariffs was to encourage domestic vehicle production.
Toyota anticipates a significant drop of 20.8% in operating profit post-expenses. This follows a record-breaking year for profits in 2024, where manufacturers experienced the highest earnings ever recorded by Japanese car companies.
Last year, Toyota netted over $32.4 billion, marking a remarkable 96.4% increase from the previous year. However, this unprecedented growth now faces a challenge due to Trump’s tariffs, suggesting that the president is navigating trade negotiations with influences on the company’s gains. The Trump administration has put on hold retaliatory tariffs on most trade partners, excluding China, while still open to discussions.
The president’s decision to ease certain automobile tariffs came just before Japan’s chief trade negotiator, Lyosei Akazawa, was set to meet with officials in Washington.
Akazawa shared with the media that a leading automotive executive revealed, “we’ve lost $1 million per hour” because of the new tariffs.
“While the national interest is crucial and cannot be compromised, our company incurs losses daily, so we must proceed with caution and urgency,” Akazawa stated in late April.
Next week, Japanese automakers Nissan and Honda are expected to announce their revenue for the fiscal year.
