Toyota Warns $1.3 Billion Profit Hit from US. Tariffs Within Two Months
Date: 08-may-2025 | By: Nuztrend Team
Global auto giant Toyota has warned that recently imposed U.S. tariffs could wipe out $1.3 billion in profits over just two months. The figure, equivalent to roughly ¥180 billion, highlights the rapid and severe impact of the trade measures introduced by the Trump administration.
According to a company briefing, the 25% tariffs on imported vehicles and auto parts are expected to slash operating income for April and May 2025. Toyota is now reevaluating its production and export strategy to mitigate ongoing trade pressure.
Fiscal Outlook: 21% Profit Decline Expected
In addition to the short-term loss, Toyota has projected a 21% decline in operating profit for the fiscal year ending March 2026. The company estimates it will earn around ¥3.8 trillion ($26 billion), down from ¥4.8 trillion ($33 billion) the previous year.
The company cited both the tariffs and fluctuating global demand as contributing factors. Despite a weaker yen and strong hybrid sales, Toyota acknowledged that trade tensions are beginning to weigh heavily on its global operations.
Strategic Adjustments Underway
Toyota is reportedly exploring ways to boost local manufacturing in the United States to offset the cost of tariffs. However, executives warned that the rapidly shifting political environment makes long-term planning difficult. As negotiations between the U.S. and Japan continue, the company is adopting a cautious outlook.
“We are closely monitoring developments and remain committed to serving U.S. customers efficiently while protecting our profitability,” a Toyota spokesperson said during the announcement.
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Industry Impact and Broader Trade Ramifications
The tariffs are part of a broader protectionist push by the Trump administration, aimed at reducing reliance on foreign goods and boosting domestic production. However, analysts warn that such moves could backfire by increasing vehicle prices and limiting consumer choice.
According to Reuters, Toyota’s case is one of the most visible examples of how trade policy is affecting the global auto industry. Other automakers are also expected to revise their forecasts if tariffs remain in place.
Meanwhile, the Financial Times reports that Toyota still managed to outperform expectations for the fiscal year ending March 2025, largely due to favorable exchange rates and a surge in hybrid vehicle demand.
Looking Ahead
Toyota’s warning is a reminder of how quickly trade dynamics can affect even the most established global businesses. As the industry watches for further developments, the automaker’s next steps may serve as a blueprint—or a warning—for others navigating turbulent geopolitical waters.
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