Toyota Cuts 2026 Profit Forecast by 15% Due to U.S. Tariffs

Toyota Motor Corporation has revised its annual performance guidance, warning that U.S. tariffs on imported cars will reduce its operating profit by 1.4 trillion yen (approximately 95 billion dollars). The company now expects an operating profit of 3.2 trillion yen for the fiscal year ending March 2026, down from the initial forecast of 3.8 trillion yen. This adjustment is primarily due to the high tariffs imposed by the U.S. on imported cars, which will significantly increase Toyota's production costs and potentially impact its competitiveness in the global market.

The impact of U.S. tariffs was evident in the first quarter, where they resulted in a 450 billion yen loss. Toyota anticipates that the total impact for the entire fiscal year will reach 1.4 trillion yen. The company reported an operating profit of 1.17 trillion yen for the April to June quarter, exceeding analyst expectations of 890 billion yen. However, the overall outlook remains pessimistic due to the tariff burden.

Last month, Japan and the U.S. reached a trade agreement, subjecting Japanese automakers' exports to the U.S. to a 15% tariff. While this rate is lower than the industry's expected 25%, the implementation details remain uncertain. The U.S. President has also indicated that Japan will accept the import of Ford's F-150 pickup trucks, further highlighting the differing interpretations of the trade agreement between the two nations.

In July, Toyota expressed hope for improved U.S.-Japan relations and called for further reductions in tariffs. The company's revised guidance reflects the significant financial impact of the tariffs, which could force Toyota to reassess its production and export strategies. The ongoing trade tensions underscore the challenges faced by global automakers in navigating complex international trade policies.