The company said Thursday that the impact for April and May has been tentatively factored in, and the situation remains uncertain. That’s set to weigh on its full-year results, with its outlook for operating income of ¥3.8 trillion for the year ending March 31, 2026, falling far short of analyst expectations of ¥4.7 trillion.
The carmaker said operating profit for its latest financial year was ¥4.8 trillion, well below the record ¥5.35 trillion during the 2024 fiscal year — an all-time high for any Japanese company. The company reported a lukewarm finish to the year, with profit rising 0.3% in the fourth quarter to ¥1.1 trillion.
“When it comes to tariffs, the details are still incredibly fluid so it’s difficult to take steps or measure the impact,” Chief Executive Officer Koji Sato said at a briefing following the results. Toyota will consider building out local product development and manufacturing in the US in the medium to long term, he said.
Mounting Costs
Toyota joins some of the world’s best-known companies in warning about the likely cost of Trump’s tariffs. The automotive industry is set to be hit particularly hard and the ever-changing trade policies have sparked chaos across the complex web of firms that make up the global supply chain.
Some automakers like Stellantis NV and Mercedes-Benz Group AG have pulled their earnings forecasts entirely, while others have warned of substantial impacts to their bottom lines. General Motors Co. slashed its profit outlook due to as much as $5 billion of exposure to auto tariffs, while Ford Motor Co. suspended its full-year financial guidance amid expectations of a $1.5 billion hit to results.
Last week, Trump offered some relief to the industry by signing a directive that would exempt imported automobiles from separate tariffs on aluminum and steel. That came alongside a separate proclamation that allows carmakers that produce and sell completed automobiles in the US to claim an offset worth up to 3.75% of the value of American-made vehicles — a temporary reprieve from the 25% tariff on imported parts that took effect May 3.
While the policy shifts have complicated investment plans for many companies, Toyota has maintained that it will stay the course when it comes to its operations in the US.
Meanwhile, the impact of tariffs has seen Nissan Motor Co. halt US orders for SUVs built in Mexico, while Honda Motor Co. is shifting production of the hybrid version of its Civic from Japan to the US. Mazda Motor Corp. will stop exporting one model type to Canada that’s made in the US as a temporary countermeasure.
Sale Surge
The US is the largest market for five of Japan’s biggest carmakers. It accounted for around 23% of Toyota’s global sales last year, 28% for Nissan and 71% for Subaru, according to Bloomberg Intelligence. Of the roughly 5.9 million vehicles that Japan’s manufacturers sold in the US last year, about half were imported.
Major Japanese carmakers, including Toyota, saw a surge in US sales in March as customers rushed to lock in purchases before the tariffs kicked in and potentially add thousands of dollars to car prices.
“It’s unlikely we’ll make a big pivot since we’re still waiting to see the results of ongoing trade negotiations,” said Chief Financial Officer Yoichi Miyazaki. In the short term, Toyota isn’t going to raise prices because tariffs were implemented, he said.
As well as the fallout of US tariffs on Toyota, investors are assessing the impact of Chairman Akio Toyoda’s attempted buyout of loom and car parts business Toyota Industries Corp. His proposal values the latter at ¥6 trillion and would it rank among the biggest buyouts on record globally.
When asked about the potential deal, Sato declined to share any details about plans for further integration within the Toyota group, though he reiterated the importance of Toyota Industries as a materials business to the carmaker and the broader business.
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