Toyota Motor Corp. (NYSE:TM) has projected a one-fifth decline in operating profit for the fiscal year ending March 2026, citing significant headwinds from President Donald Trump‘s tariff policies and a stronger yen just one year after posting record earnings.
What Happened: Toyota CEO Koji Sato announced Thursday that the world’s largest automaker expects a $1.3 billion financial impact from U.S. tariffs in April and May alone, with future effects “very difficult to forecast” due to extreme uncertainty in global trade relations, reported the New York Times.
“The current environment surrounding the auto industry, including trade relations, is in extreme flux,” Sato said during a briefing.
The somber outlook represents a dramatic reversal from May 2024, when Toyota reported the highest annual profit ever recorded by a Japanese firm.
See Also: Ford Hikes Prices Of Select Mexico-Produced Vehicles Amid Auto Tariff Uncertainty: Report
Why it matters: According to JPMorgan analyst Akira Kishimoto, Japanese automakers collectively could face a potential hit of 4.46 trillion yen (about $29.44 billion) from the tariffs, though Toyota remains JPMorgan’s top pick given its resilience and strong fundamentals.
Toyota is reportedly considering shifting production of its next-generation RAV4 SUV to Kentucky by 2027 to bypass the tariffs, according to Reuters. The RAV4 was America’s best-selling vehicle in 2024, with over 475,000 units sold, representing approximately 20% of Toyota’s total U.S. vehicle sales.
Other automakers have made similar downward revisions, with General Motors lowering its 2025 profit forecast by over 20% last week, citing projected cost increases of $4 billion or more from the Trump tariffs.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
