Toyota Warns of Declining Profits Due to Trump Tariffs

Preparing for a challenging year, the Japanese auto maker Toyota Motor Corporation has warned of declining profits as global manufacturers scramble to protect themselves from disruptions caused by tariffs imposed by US President Donald Trump.

The company said that it expects operating profit to reach $26 billion for the fiscal year ending March 31, 2026, lower than analysts’ expectations of 4.7 trillion yen, compared to 4.8 trillion yen last year, and the record 5.35 trillion yen achieved by the company in fiscal 2024, which is the highest level ever achieved by a Japanese company.

“We will continue our efforts to maintain our policy of stable dividend increases that reward our long-term shareholders,” the company said while announcing the first quarter results for 2025.

The conservative forecast comes after a lackluster finish to the last fiscal year, with profits rising 0.3% to $1.3 billion in the fourth quarter, thanks to a steady recovery in sales in the US, Japan, and China.

Toyota indicated that it had initially considered that US tariffs would result in a $1.2 billion profit loss in April and May. It joins a growing number of automakers, dealers, and parts suppliers negatively impacted by Donald Trump’s trade strategy.

The consolidated vehicle sales for this fiscal year were 9.362 million units, which was 99.1% of consolidated vehicle sales for the previous fiscal year.

Toyota and Lexus vehicle sales was 10.274 units, which was 99.7% of such sales for the previous fiscal year due to supply constraints caused by the certification issue and other factors. The proportion of electrified vehicles was 46.2%, a significant increase from the previous fiscal year, mainly led by HEVs which were increased by 850,000 units from the previous year, Toyota said.

Yoichi Miyazki, Executive Vice President (Chief Financial Officer), Toyota, said that even as they made comprehensive investments for the future and continue to strengthen their foundations, efforts such as price revisions and the expansion of value chain earnings enabled the company to sustain a high level of profit.

Sales in US Market

For the five major Japanese car makers, the US is the primary market and Toyota accounted for approximately 23% of global sales for the company, 28% for Nissan, and 71% for Subaru, according to Bloomberg Intelligence. Imported vehicles accounted for approximately half of the approximately 5.9 million units sold by Japanese companies in the US last year.

Major Japanese automakers, including Toyota, saw sales in the United States surge in March as customers rushed to complete purchases before tariffs took effect and potentially increased vehicle prices by thousands of dollars.