Toyota Motor Corporation reduced its full-year operating income forecast by ¥600 billion ($4.1 billion) to ¥3.2 trillion ($22.1 billion) after U.S. tariffs delivered a ¥450 billion ($3.1 billion) blow to first-quarter profits, the automaker reported Wednesday.
The world’s largest carmaker said operating income for the April-June period fell 11% to ¥1.17 trillion ($8.0 billion) despite global vehicle sales climbing 7.1% to 2.41 million units. Net income plunged 37% to ¥841 billion ($5.8 billion) as the company absorbed costs from President Donald Trump’s 25% levies on imported vehicles.
The Japanese manufacturer now expects U.S. tariffs to slash annual profits by ¥1.4 trillion ($9.7 billion), up from a previous estimate of ¥200 billion ($1.4 billion). The escalated impact reflects the full-year effect of trade restrictions that took hold in April, forcing the company to revise assumptions about sustained trade tensions.
Toyota has resisted passing tariff costs directly to consumers, instead pursuing cost-reduction measures and supply chain adjustments. The strategy helped maintain market share but pressured margins, with operating profit margin falling to 9.5% from 11.1% a year earlier.
Regional performance painted a mixed picture. While North American operating income dropped ¥164.4 billion due to tariff impacts, other regions posted gains. Vehicle sales in Asia jumped 12.7%, though profit fell slightly due to competitive pricing pressure.
The automaker’s electrified vehicle ratio reached 47.6%, driven primarily by hybrid sales in North America and Asia. Toyota sold 1.26 million electrified vehicles globally, representing nearly half of total deliveries.
Finance chief Yoichi Miyazaki indicated the company would continue comprehensive investments in human resources and growth areas totaling ¥470 billion ($3.2 billion) annually, even as external headwinds intensify. Toyota maintained its commitment to producing 3 million vehicles domestically despite trade pressures.
Exchange rate fluctuations provided some offset, with the weaker yen contributing ¥30 billion to quarterly results. However, this benefit was overshadowed by tariff-related expenses and higher material costs.
The earnings underscore broader challenges facing Japanese automakers as trade policies reshape global supply chains. Honda and Nissan have similarly warned of profit pressures from import duties, though Toyota’s larger U.S. exposure makes it particularly vulnerable to policy shifts.
