Toyota slashes FY26 forecast, warns of $9.5 bn hit from US tariffs, revising operating income to ¥3.2 trillion

Toyota Motor Corp. has lowered its annual guidance due to a $9.5 billion hit from US tariffs, now forecasting ¥3.2 trillion in operating income for FY26. The carmaker previously estimated a ¥180 billion hit in April and May and now anticipates a ¥1.4 trillion impact from tariffs. The estimate dwarfs recent forecasts from global heavyweights, with Toyota's shares falling as much as 2.4% in Tokyo.

Toyota Motor Corp. has significantly revised its annual guidance, projecting a $9.5 billion hit from US tariffs on imported cars. The world's largest automaker now expects ¥3.2 trillion in operating income for the fiscal year ending March 2026, down from its previous forecast of ¥3.8 trillion [1].

The carmaker's pessimistic outlook reflects the fallout of US tariffs, which it estimates will have a ¥1.4 trillion impact over the full fiscal year. This is a substantial increase from its earlier estimate of a ¥180 billion hit in April and May [1]. Toyota's shares fell as much as 2.4% in Tokyo following the announcement [3].

The tariff impact has been particularly significant in the first quarter, with operating profit reduced by ¥450 billion due to US levies [1]. The carmaker has also cited higher material costs and a stronger yen as additional challenges [2].

Despite these challenges, Toyota logged record global sales during the first half of 2025, driven by strong demand for its gas-electric hybrids in core markets. It sold 5.5 million units between January and June, a 7.4% increase from the previous year, largely due to robust sales in the US, Japan, and China [1, 3].

Toyota's estimate of the tariff impact dwarfs recent forecasts from other global heavyweights. Ford Motor Co. expects a net tariff impact of $2 billion, about $500 million more than previously estimated, while Stellantis NV and General Motors Co. anticipate tariff impacts of €1.5 billion and $4 billion to $5 billion, respectively [3].

The uncertainty surrounding the finer details of the bilateral trade agreement between Japan and the US, which sets a 15% tariff on Japanese auto exports, adds to the pressure on Japanese automakers [1, 2]. Despite the turmoil, Toyota remains optimistic about the potential for improved ties between the US and Japan, and it continues to call for further tariff reductions [1].

References:
[1] https://www.bloomberg.com/news/articles/2025-08-07/toyota-cuts-annual-guidance-braces-for-9-5-billion-tariff-hit
[2] https://m.economictimes.com/news/international/business/toyota-worlds-biggest-automaker-cuts-annual-profit-estimate-by-16-amid-us-tariff-hit/articleshow/123157613.cms
[3] https://www.business-standard.com/world-news/toyota-slashes-fy26-forecast-warns-of-9-5-bn-hit-from-us-tariffs-125080700527_1.html