Toyota says tariffs will erase $1.3bn in profits in just 2 months

A year ago, the world’s biggest automaker was on a tear. American consumers were snapping up Toyota Motor’s hybrids, and a weak yen inflated the value of the company’s earnings. That May, Toyota reported the highest annual profit ever recorded by a Japanese firm.

- RIVER AKIRA DAVIS

Yesterday, Toyota presented a significantly more somber outlook, projecting that its operating profit would decline by about one-fifth for the fiscal year ending in March. It cited headwinds from a stronger yen and predicted a $1.3 billion hit from US President Donald Trump's tariffs in April and May alone.

The company estimated the effect of the auto tariffs, which started in April, only for those two months. Beyond that, their impact is “very difficult to forecast,” Toyota's chief executive, Koji Sato, said in a briefing yesterday. “The current environment surrounding the auto industry, including trade relations, is in extreme flux,’ he said.

The murkiness of Toyota's forecast underscores how the whiplash of Trump’s tariff agenda is upheaving the auto industry and leaving many global companies unable to estimate future prospects. A 25% tariff on vehicle imports into the United States, implemented early last month, was extended to auto parts last week.

TALKS MOVE SLOWLY