Toyota, the world’s top-selling carmaker, has announced that it expects a significant hit to its profits due to United States President Donald Trump tariffs on cars imported to the US. The company forecasts a $9.5 billion loss, underscoring growing margin pressures on global manufacturers grappling with rising costs from US levies on cars, parts, steel, and aluminium. “It’s honestly very difficult for us to predict what will happen regarding the market environment,” Takanori Azuma, Toyota’s head of finance, told a briefing, vowing to keep making cars for US customers, regardless of tariff impact.
The tariffs have taken a toll on Toyota’s North American business, which swung to an operating loss of 63.6 billion yen ($431.3 million) in the first quarter, from a profit of 100.7 billion yen ($682.9 million) a year earlier. The company has cut its forecast for full-year operating profit by 16 percent, reflecting challenges for global manufacturers grappling with rising costs from US levies on cars, parts, steel, and aluminium.
Other automakers have also reported significant hits from the tariffs. Jeep maker Stellantis said tariffs were expected to add $1.7 billion in expenses for the year. General Motors (GM) has projected a $4 billion to $5 billion hit, while Ford expects a $3 billion gross hit to pretax adjusted profit. On Wednesday, Ford reported that second-quarter results took an $800 million hit from tariffs.
The trade pact between Tokyo and Washington offers potential relief, with Japanese auto exports into the US facing a 15 percent tariff, down from levies totalling 27.5 percent previously. However, a timeframe for the change has yet to be unveiled. Toyota’s broad production operations, which include US, Canadian, Mexican, and Japanese plants, expose it to tariffs not only on direct exports but also on vehicles and parts shipped across borders within North America.
Despite the challenges, Toyota has announced plans to build a new vehicle factory in Japan, where car sales have been falling due to a shrinking population and declining ownership. The company said it planned to start operations early next decade at the new plant, but has yet to decide production models. Toyota’s stock is on the decline amid its downward revised forecast, down by 1.6 percent as of 11:30 am in New York City.
The tariffs have significant implications for the global automotive industry, with many companies struggling to adapt to the changing trade landscape. As the situation continues to unfold, it remains to be seen how companies like Toyota will navigate the challenges posed by the tariffs.