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Highlights

  • Toyota projects $1.2 billion profit hit in two months due to U.S. tariffs on cars and auto parts.

  • Trump administration targets Japanese automakers, complicating ongoing U.S.-Japan trade talks.

  • Despite local investments, Toyota remains vulnerable, importing 1.2 million vehicles into the U.S. annually.

Toyota Motor Corp., the world’s largest automaker, has emerged as the biggest corporate casualty of the Trump administration’s renewed trade offensive, projecting a staggering $1.2 billion profit hit over just two months from newly imposed U.S. tariffs.

The Japanese auto giant’s forecast comes on the heels of similar financial blows to American rivals. General Motors has slashed its annual profit outlook by up to $5 billion, while Ford expects a $1.5 billion tariff-related loss. Although Toyota hasn’t released full-year projections on the tariff impact, the company’s latest guidance places its fiscal 2025 operating income at ¥3.8 trillion (US$26.1 billion)—well below analysts' consensus of ¥4.7 trillion.

Despite efforts to localize production, Toyota remains heavily reliant on imports. Around 1.2 million vehicles sold in the U.S. annually are manufactured abroad, particularly in Japan. While more than half of its American sales are now produced domestically, the import dependency has drawn direct attention from the White House. President Trump named Toyota in his April 2 Liberation Day speech, criticizing the brand for selling “one million foreign made automobiles” in the U.S.

The new tariffs, effective April 3 for vehicles and May 3 for auto parts, have thrown the global auto market into flux. Toyota has opted not to pass the higher costs on to consumers, maintaining stable sticker prices and consistent production at its 11 U.S. factories, despite the rising costs. 

Toyota CEO Koji Sato acknowledged the uncertainty in a recent earnings call, saying, “When it comes to tariffs, the details are still incredibly fluid. It’s difficult to take steps or measure the impact.” Meanwhile, Japan’s chief trade negotiator Ryosei Akazawa revealed that one Japanese automaker—believed to be Toyota—is losing close to $1 million per hour due to the tariffs, though he declined to name the source directly.

The trade talks between Japan and the U.S., which began in February, have yet to yield a breakthrough. A new round of negotiations is scheduled for late May, with hopes of a deal by June. But with the U.S. running a $68.5 billion trade deficit with Japan, compared to a $11.9 billion surplus with the U.K., expectations for a swift agreement remain low.

Meanwhile, other Japanese automakers are adapting. Nissan has paused U.S. orders for certain Mexico-made SUVs, Honda is shifting Civic hybrid production from Japan to the U.S., and Mazda has halted Canadian exports of a model built in Alabama due to retaliatory duties.

Toyota, for its part, continues to walk a tightrope—balancing domestic loyalty with international expansion. The company has invested $13.9 billion in a new battery plant in North Carolina, part of a broader $21 billion commitment to U.S. operations since 2020. It also boosted direct U.S. employment to 31,000 workers, up from 25,000 in 2016.

Yet, Japan remains the heart of Toyota’s manufacturing empire. The company produced 3.1 million vehicles domestically in 2024, and Chairman Akio Toyoda has pledged to keep annual production above the three-million mark.