Tariffs slash Toyota’s profit forecast by $9.5bn, threatening jobs and car prices

Toyota, the world’s largest carmaker, has warned it could lose $9.5 billion in profit this year due to U.S. tariffs, the biggest blow reported by any global company so far. Tariffs are taxes charged on imported goods. They make products more expensive to bring in, which can cut a company’s profits if costs can’t be passed to buyers.

The Japanese automaker said on Thursday that it had slashed its full-year operating profit forecast by 16% to 3.2 trillion yen ($21.7 billion), down from 3.8 trillion yen, as tariffs on cars, parts, steel, and aluminium push costs higher.

“This is the most severe impact we have ever faced from tariffs,” said Takanori Azuma, Toyota’s finance chief. “We will keep building cars for our U.S. customers no matter what happens.”

The forecast includes losses faced by suppliers, especially U.S. firms importing parts from Japan. Toyota declined to reveal the exact breakdown.

By comparison, rival General Motors expects a $4-5 billion hit this year, Ford projects about $3 billion, and Stellantis, which makes Jeep, sees an extra $1.7 billion in costs.

North American losses mount

Toyota’s North American operations swung to a 63.6 billion yen ($430 million) loss in the first quarter, compared to a 100.7 billion yen profit a year earlier. The company said the tariffs cost it 450 billion yen in that period alone.

Toyota’s vast production network, spanning Japan, the U.S., Canada, and Mexico, means tariffs hit not just exports to America but also cross-border vehicle and parts shipments within North America.

The company produced 1.1 million Toyota and Lexus vehicles in North America in the first half of 2025, including more than 700,000 in the U.S.

Trade deal offers hope but no timeline

A trade pact signed last month between Washington and Tokyo could lower tariffs on Japanese car exports to the U.S. from 27.5% to 15%. But no date has been set for the change.

Despite the tariff pain, Toyota reported record global production and sales for the first half of the year, fueled by demand in North America, Japan, and China, particularly for hybrids.

New plant plans amid falling home sales

Toyota also announced plans for a new vehicle factory in Japan, set to open early next decade. The move comes as domestic car sales fall due to a shrinking population and reduced ownership rates.

Read more on Porsche, Aston Martin raise U.S. prices as 15% tariffs hit