- US tariffs on imported vehicles and parts, plus currency changes, will hurt Toyota this year.
- Despite the challenges that lay ahead, Toyota expects North American sales to rise.
- The Japanese automaker may divert some vehicles destined for the US to other markets.
The tariffs imposed by US President Donald Trump are hurting Toyota – badly. For the fiscal year ending March 2026, the Japanese automotive juggernaut believes its net profit could fall by as much as 34.9% and is also bracing for a plunge of its operating profit of over 20%. However, there’s a sliver of good news, and that’s that it won’t increase prices, at least not in the short term.
In its most recent financial report released on May 8, Toyota revealed that operating profit will drop 20.8% to 3.8 trillion yen, or ~$26 billion, in the next fiscal year ending in March 2026. By comparison, its operating profit for the fiscal year that just passed was 4.8 billion yen. A near-30% drop in net profit to 3.1 trillion yen (~$21.5 billion) also spells trouble for the company.
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Tariffs aren’t the sole reason for Toyota’s frightening financials. It expects to see a 745 billion yen (~$5.1 billion) impact from the Japanese yen’s appreciation against the US dollar. Higher material prices will hit Toyota by a further 350 billion yen (~$2.4 billion). Because of how quickly President Trump is tweaking his tariff policies, Toyota couldn’t specify what the full impact of them will be, other than predicting a negative impact of 180 billion yen ($1.2 billion) for April and May alone.
“As the government and its agencies are currently working hard, details of [the U.S.] tariffs are still changeable,” Toyota president and chief executive Koji Sato said. “It’s very difficult to predict what will happen next. On the other hand, we have already included [the effect of] the parts which have been implemented in our forecasts for this fiscal year.”
Even so, Toyota’s sales in the US remain strong. Chief financial officer Yoichi Miyazaki noted the brand expects to sell 2.94 million vehicles in North America during the current fiscal year, which would represent an 8.8% increase from the previous one. He added that “Toyota will not take any short-term measures, such as raising prices due to tariffs.”
Speaking with Nikkei Asia, Sato added that some vehicles destined for the US could be shipped to other markets as Toyota continues to make adjustments: “It would be desirable to distribute products to the U.S, where there are many customers [for us]”, he stated. “But in the short term, we also should consider adjusting to their destinations.”
