Toyota braces for $9.5-billion hit from U.S. tariff turmoil

Toyota Motor Corp. has lowered its annual guidance as it warned of a $9.5-billion hit to its bottom line from U.S. tariffs that have rattled the global automotive industry.

The world’s biggest carmaker now sees $21.75 billion in operating income for the fiscal year ending in March 2026, it said Thursday. That’s down from its initial forecast of $25.8 billion, and also missed analyst expectations.

The carmaker reported operating income of $7.95 billion in the first quarter, down 11% from a year earlier, though beating analysts’ predictions for $6 billion. While price hikes in some regions helped that metric, the tariff impact was $3 billion for the period.

The outlook, which coincides with the start of President Trump’s sweeping new tariffs, marks the carmaker’s most comprehensive account of its likely impact beyond a previous estimate that it faced a $1.2-billion hit in April and May alone.

Toyota’s estimate dwarfs recent forecasts from global heavyweights as the auto industry contends with fast-changing policies that are seeing costs balloon.

Ford Motor Co. said last week that it sees a net tariff impact of $2 billion, about $500 million more than the company expected. Meanwhile, Stellantis NV sees tariffs setting back earnings by about $1.7 billion, and General Motors Co. said its exposure is $4 billion to $5 billion.

Still, Toyota has a tendency to take a conservative approach to forecasts and “recent trends suggest potential upside, with Japan, North America, and China leading the charge,” said Bloomberg Intelligence senior auto analyst Tatsuo Yoshida. “Toyota appears to be working on initiatives to mitigate the tariff burden — such as revising its supply chain for U.S.-bound vehicles.”

Its forecast is also more pessimistic than Japanese peers. Subaru Corp. pegs the tariff impact at $1.4 billion, Nissan Motor Co. forecasts $2 billion, and Honda Motor Co. anticipates $3 billion. Toyota’s shares fell as much as 2.4% in Tokyo, before closing down 1.5%.

Japanese carmakers now face a 15% tariff on vehicles they send to the U.S. after the two countries reached a trade pact last month that also includes plans for Japan to create a $550-billion American investment plan.

While the rate is lower than the additional 25% anticipated by the industry, uncertainties linger over the finer details of its implementation — auto tariff discounts for the European Union, Japan and South Korea have yet to be codified and until they do, cars will face the higher charge.

Toyota said in July, in response to the deal, that it hopes for improved ties between the U.S. and Japan, and called for further tariff reductions.

Despite the turmoil, Toyota logged record global sales during the first half of 2025, thanks to strong demand for its gas-electric hybrids in core markets. It sold 5.5 million units between January and June, a 7.4% bump from the previous year, mostly due to robust sales in the United States, Japan and China.

The carmaker expects group sales of 11.2 million this year. Toyota also plans to build a new vehicle manufacturing plant in Japan’s Aichi, with operations slated to start in the early 2030s and aimed at maintaining domestic production at 3 million vehicles.

Takahashi writes for Bloomberg.