Toyota's profits experienced a significant downturn during the April-June quarter. The company announced a 37% decrease in profits, leading to a reduction in its full-year earnings forecasts. This financial setback was largely attributed to the impact of tariffs imposed by President Donald Trump.
The Japanese automaker's report was based on the assumption that Trump's tariffs on exports from Japan, including automobiles, would be 12.5% starting this month. However, the tariffs currently stand at 15%. Toyota, a leading global automaker, also manufactures vehicles in Mexico and Canada.
In the last quarter, Toyota's profit reached 841 billion yen, equivalent to $5.7 billion. This figure represents a decrease from the 1.33 trillion yen recorded during the same period the previous year. Despite the profit decline, the company's quarterly sales saw a 3% increase.
The status of exports from Mexico and Canada remains uncertain, as these countries benefit from the U.S. Mexico Canada Agreement. This agreement, renegotiated during Trump's first term, eliminated most tariffs and trade barriers between the three nations.
Toyota's April-June profit of 841 billion yen ($5.7 billion) was a decrease from the 1.33 trillion yen recorded in the same period of 2024. Quarterly sales rose 3% to 12 trillion yen ($82 billion). The company stated that the tariffs resulted in a 450 billion yen ($3 billion) loss in quarterly operating profit. Cost reduction efforts and an unfavorable exchange rate also contributed to the financial challenges.
The company, known for manufacturing the Camry sedan and Lexus luxury models, projects a profit of 2.66 trillion yen ($18 billion) for the full fiscal year ending in March 2026. This is a decrease from the earlier forecast of 3.1 trillion yen ($21 billion). Toyota's earnings in the previous fiscal year were nearly 4.8 trillion yen.
Toyota released a statement highlighting its efforts to mitigate the impact of the tariffs. The company emphasized its ongoing investments, improvements in unit sales, cost reductions, and expansion of value chain profits.
At the retail level, Toyota sold 2.4 million vehicles worldwide. Sales increased in Japan, North America, and Europe compared to the previous year, when global retail totaled 2.2 million vehicles.
Analysts suggest that Toyota is likely among the most affected global companies by the tariffs, even when compared to other Japanese automakers.
6 Comments
Katchuka
If Toyota had better cost management, they wouldn't be so impacted by tariffs. It's poor management, plain and simple.
Noir Black
How can they blame tariffs when other automakers seem to handle similar situations without massive profit declines?
Katchuka
It's concerning to see how tariffs are impacting giants like Toyota. They need our support during these tough times.
Loubianka
In the face of adversity, it's amazing to see that Toyota remains committed to improving their operations. Keep pushing forward!
KittyKat
It's important to recognize that world economics is a challenging playing field. I stand by Toyota!
Michelangelo
It's ridiculous that companies like Toyota blame external factors like tariffs for their profit losses. They need to focus on improving their business strategy instead.