Toyota Motor Corp. is the most important carmaker on this planet — and likewise the auto business’s largest loser relating to projected losses from US President Donald Trump’s commerce battle.
Duties on imported vehicles and auto components pressured Basic Motors Co. to slash its full-year revenue steerage by as a lot as $5 billion whereas Ford Motor Co. is bracing for a $1.5 billion annual hit. Toyota sees a $1.2 billion revenue drop in simply two months. Whereas the Japanese automaker didn’t present a tally for all of 2025, it did challenge working earnings of ¥3.8 trillion ($26.1 billion) for the fiscal yr ending March 2026 — far under the ¥4.7 trillion anticipated by analysts.
Whereas Toyota has elevated native manufacturing within the US to greater than half of gross sales within the nation, it nonetheless depends on imports of key car components and fashions — to the tune of some 1.2 million vehicles a yr. The White Home has observed, with Trump calling out the Toyota Metropolis-based automaker by identify throughout his contentious Liberation Day speech within the Rose Backyard on April 2. He complained about Toyota’s “one million foreign made automobiles” bought within the US.
The large tariff hit displays the corporate’s choice to carry the road on sticker costs at US sellers and manufacturing volumes at its 11 American factories amid the beginning of bilateral commerce negotiations between the US and Japan. These talks began in February and it’s unclear when they may conclude with a deal.
“When it comes to tariffs, the details are still incredibly fluid,” Toyota’s Chief Government Officer, Koji Sato, stated final week after releasing the most recent monetary outcomes. “It’s difficult to take steps or measure the impact.”
Japan’s chief commerce negotiator, Ryosei Akazawa, stated on April 30 that one unnamed Japanese automaker is at present shedding round $1 million per hour from the tariffs, citing a calculation made by an unidentified company government. A Japanese authorities official on Friday declined to supply extra specifics. However that fee of loss isn’t too far off the mark from the $1.2 billion hit Toyota is projecting primarily based on 730 hours monthly. Representatives for Toyota additionally didn’t reply to a request for remark.
Akazawa has expressed hope that an settlement could possibly be reached in June with the subsequent spherical of negotiations happening in late Might.
Most imported automobiles grew to become topic to a 25% US obligation on April 3 whereas most auto components grow to be topic to that levy as of Might 3. There are some government orders that stop duties from doubling up however contemplating the US is the largest market for Japan’s 5 largest carmakers, even a reasonably improve in tariffs may have an outsized influence on their backside strains.
Learn extra: Trump Tariffs Already Hitting Some Japanese Companies, Survey Reveals
The Trump administration reached its first commerce deal on Might 8 with the UK. However the US had a $11.9 billion items commerce surplus with the UK final yr, whereas it ran a $68.5 billion deficit with Japan. Which will make it tougher to safe an settlement with out important concessions by one aspect.
“The hurdle is high for Japan to get auto tariffs lowered” on exports to the US, stated Hiroshi Namioka, chief strategist at T&D Asset Administration Co. “At the same time, the auto industry is too important for Japan to simply go along with what the US wants.”
Some Japanese automakers have responded to the robust new commerce atmosphere by making modifications to their international manufacturing footprints. Nissan Motor Co. halted US orders for SUVs in-built Mexico whereas Honda Motor Co. is shifting manufacturing of the hybrid model of its Civic from Japan to the US. On account of retaliatory tariffs in opposition to the US, Mazda Motor Co. is stopping exports to Canada of 1 mannequin that’s manufactured at an Alabama manufacturing facility that’s a three way partnership with Toyota.
Japan Manufacturing Pledge
Toyota has already invested closely to construct out its US operations — together with spending $13.9 billion on a new battery plant in North Carolina. However it additionally stays dedicated to sustaining its intensive home manufacturing base. Chairman Akio Toyoda has repeatedly pledged to maintain making at the very least three million automobiles a yr in Japan. Final yr, the corporate constructed 3.1 million vehicles in its residence nation, a couple of third of its worldwide manufacturing whole.
Globally, Toyota bought 10.8 million vehicles in 2024, with the US accounting for rather less than 1 / 4 of these. Whereas half had been made regionally and one other 30% got here from neighboring Canada and Mexico, some 281,000 automobiles had been imported from Japan. That features fashionable fashions such because the 4Runner mid-sized SUV, Prius hybrid and several other upscale Lexus automobiles.
The corporate’s best-sellers within the US — the RAV4 hybrid crossover and Corolla compact sedan — are assembled at factories in Kentucky and Mississippi. However gas-only RAV4s are imported from Canada and the plug-in hybrid comes from Japan. Corolla fashions variants just like the sporty GR, sensible hatchback and gas-electric hybrid additionally carry made-in-Japan labels.
That publicity places Toyota within the crosshairs of the Trump administration and means the automaker has so much using on the result of the US-Japan commerce negotiations.
The carmaker has quietly pushed again on the White Home’s critique, noting by a spokesman that it’s dedicated to spend virtually $21 billion within the US simply since 2020. That’s almost double the pledge it made throughout Trump’s first administration — after equally coming beneath assault by the US president. Toyota additionally stated has elevated direct manufacturing employment within the US to 31,000 staff, up from 25,000 in 2016.
One situation it faces: A extreme restraint on flexibility at present manufacturing amenities within the US, which might have an effect on its capacity to shift automobiles from abroad vegetation. Toyota’s manufacturing facility in Georgetown, Kentucky — the oldest and largest of its US vehicle-assembly operations — has no slack for brand spanking new fashions. It was working full-tilt at almost 100% of its most capability as of late April, in accordance with a US-based consultant for the corporate.
This story was initially featured on Fortune.com
