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(Bloomberg) — Toyota Motor Corp (TM, 7203.T). said US President Donald Trump’s tariffs will result in a ¥180 billion ($1.3 billion) hit to operating income in just two months, with the Japanese carmaker joining a growing list of companies grappling with the fallout of trade turmoil.
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The company said Thursday that the impact for April and May has been tentatively factored in, and the situation remains uncertain. That’s set to weigh on its full-year results, with its outlook for operating income of ¥3.8 trillion for the year ending March 31, 2026 falling far short of analyst expectations of ¥4.7 trillion.
The carmaker said operating profit for its latest financial year was ¥4.8 trillion, well below the record ¥5.35 trillion during the 2024 fiscal year — an all-time high for any Japanese company. The company reported a lukewarm finish to the year, with profit rising 0.3% in the fourth quarter to ¥1.1 trillion.
“When it comes to tariffs, the details are still incredibly fluid so it’s difficult to take steps or measure the impact,” Chief Executive Officer Koji Sato said at a briefing following the results. Toyota will consider building out local product development and manufacturing in the US in the medium to long term, he said.
Toyota shares initially rose after the results, before closing 1.3% lower in Tokyo. The stock is down about 15% this year.
Mounting Costs
Toyota joins some of the world’s best-known companies in sounding the alarm about the likely costs of Trump’s tariffs. The automotive industry is set to be hit particularly hard and the ever-changing trade policies have sparked chaos across the complex web of firms that make up the global supply chain.
Some automakers like Stellantis (STLA, STLAM.MI) and Mercedes-Benz Group (MBG.DE, MBGAF) have pulled their earnings forecasts entirely, while others have warned of substantial impacts to their bottom lines. General Motors Co. (GM) slashed its profit outlook due to as much as $5 billion of exposure to auto tariffs, while Ford Motor Co. (F) suspended its full-year financial guidance amid expectations of a $1.5 billion hit to results.
Last week, Trump offered some relief to the industry by signing a directive that would exempt imported automobiles from separate tariffs on aluminum and steel. That came alongside a separate proclamation that allows carmakers that produce and sell completed automobiles in the US to claim an offset worth up to 3.75% of the value of American-made vehicles — a temporary reprieve from the 25% tariff on imported parts that took effect May 3.