Japanese automotive giant Toyota has forecast a sharp 35% decline in net profit for the 2025–26 financial year, citing U.S. tariffs imposed under former President Donald Trump as a key factor behind the projected drop.
The world’s top-selling automaker anticipates a net profit of 3.1 trillion yen (approximately $21.6 billion) for the fiscal year that began in April. This is down from the 4.8 trillion yen recorded in the previous year, which itself marked a 3.6% year-on-year decrease, though it surpassed the company's earlier estimate of 4.5 trillion yen.
In its financial statement released Thursday, Toyota said the estimated impact of U.S. tariffs on vehicle parts and imports in April and May had been “tentatively factored in,” with an expected 180 billion yen dent in operating profit.
Washington has slapped a 25% tariff on both imported vehicles and auto parts, a move Toyota says is placing considerable pressure on its overseas business. Toyota exports around 500,000 vehicles to the U.S. each year.
“This situation is difficult to predict right now,” said Toyota President and CEO Koji Sato, noting that the tariffs are still under negotiation between governments. "In the short term, we are adjusting shipments, but in the mid- to long-term, we will focus on developing products locally for American consumers."
Despite shifting some production, Sato reaffirmed Toyota's commitment to manufacturing three million vehicles annually in Japan, emphasizing the importance of protecting domestic supply chains and maintaining export earnings.
The announcement sent Toyota shares down 1.3% on the Tokyo Stock Exchange. Analysts say Toyota’s forecast is being closely watched due to the automaker’s central role in Japan’s economy — with automobiles making up roughly 28% of Japanese exports to the United States.
Though Trump recently introduced a two-year grace period for automakers to adapt their supply chains to the new tariff regime, his administration’s hardline trade stance continues to cast a shadow over Japan–U.S. trade relations.
Toyota, which sold 10.8 million vehicles globally in 2024, retained its title as the world’s top-selling carmaker. In the U.S. alone, it sold over 2.3 million units, ranking second after General Motors. In contrast, American brands struggle to gain traction in Japan, selling only a few hundred vehicles annually — a disparity Trump has publicly criticized.
“They don’t take our cars, but we take MILLIONS of theirs!” the former president declared last month, accusing Japan of exploiting its trading relationship with the United States.