Trump's tariffs will be a $10 billion hit to Toyota

"Honestly," said Toyota CFO Takanori Azuma, "it's very difficult for us to predict what's going to happen in the market." The world's largest automaker presented its quarterly results, which are typically characterized by their robustness.

Now, the big question mark is the tariffs the Donald Trump administration has imposed on imports to the United States, which will represent an additional cost for manufacturers wishing to sell their products there. The United States is the top destination for Japanese products, and Toyota vehicles are widely accepted there.

The impact is difficult to quantify, but the Tokyo-based company said it expects it could reach up to 1.4 trillion yen, or about €10 billion. This is the highest estimate any Japanese company has given regarding the consequences of the trade war.

In addition, Toyota said it expects operating profit to be 16% lower, also influenced by the relative strength of the yen against the dollar, as well as the impact on its suppliers—particularly those in the U.S. importing from Japan—reducing it from 3.8 trillion yen to 3.2 trillion yen (about €20 billion).

Other manufacturers that have warned of the potential impact on their results include General Motors (4 billion), Ford (3 billion) and Stellantis (1.7 billion).

Since Toyota follows the Japanese business calendar, this is its first quarterly earnings report of the fiscal year. The April-June period generated operating income of 1.1 trillion yen, or approximately €6.4 billion, a 10% decline compared to the same period last year.

The company's North American business, which has a significant industrial presence, reported an operating loss of $367 million, compared to an operating profit of $583 million in the same quarter of 2024.

In North America, Toyota has factories in the US, Mexico, and Canada, and Trump's tariffs directly affect vehicle imports from Japan, as well as those two countries. In total, they delivered 1.1 million vehicles in the region, 700,000 of which went to the US market.

Japan is negotiating a trade agreement similar to the one Trump approved with European Commission President Ursula von der Leyen, which will reduce its tariffs from the current 27.5% to 15%. However, there is no scheduled date for its entry into force.

Despite this, the company remains steadfast in supplying the North American market, one of the largest buyers of its vehicles. Toyota also announced it will build a new car factory in Japan, a country where sales are declining due to an aging population and significant industry taxes.