Kathmandu. Japanese auto giant Toyota has forecast a 35 percent decline in net profit in 2025/26. Toyota said that the decline in profit will be due to US President Donald Trump’s tax hike on vehicles and other reasons.
Carmakers have been among the hardest hit by the US president’s multi-pronged attack on free trade. The Trump administration has already imposed a 25 percent tax on ready-to-use cars and is also imposing a similar tax on auto parts including engines and transmissions, effective Saturday.
Toyota has forecast a net profit of 3.1 trillion yen ($21.6 billion) for Japan’s current fiscal year, which began in April. “The estimated impact of the US tariffs in April and May 2025 is provisional,” Toyota, the world’s top-selling carmaker, said in a statement.
The company posted a net profit of about 4.8 trillion yen in the 12 months to March, down 3.6 percent from the same period a year earlier but a sharper decline than its forecast in February. The loss will hit its plan this month to bring its 2025/26 operating profit to 180 billion yen. Tatsuo Yoshida, an auto analyst at Bloomberg Intelligence, said Toyota’s “impact and position” means its profit forecast is being closely watched in Japan. “I think Toyota will somehow figure out a way to calculate the impact of the tax increase and reflect it in its forecast,” he told AFP.
“If Toyota doesn’t come up with some kind of ‘benchmark’ amid economic uncertainty, the whole country, including its suppliers, will be in a loss,” he said. Automobiles accounted for about 28 percent of Japan’s total exports to the United States last year. Trump took steps to reduce his tax burden on automakers late last month, signing an executive order to limit the impact of overlapping taxes on firms.
Trump’s new policy means the company will no longer face a 25 percent tariff on imported vehicles and a 25 percent tariff on steel or aluminum. A US commerce official said importers would have to pay the higher of the two tariffs, but not both. The president also issued a proclamation giving the industry a two-year grace period to move supply chains back to the United States. Toyota sold 10.8 million vehicles worldwide in 2024.
“It’s hard to predict how the US tariffs will affect car companies’ earnings,” Takaki Nakanishi of the Nakanishi Research Institute told AFP. “Automakers are doing their best to shift production to the United States, but there won’t be any immediate big changes because it takes time to shift production,” he said. Trump last month said he had to raise the tax to address the huge disparity between direct Japanese car exports to the US and other car trade.
Toyota is the second-biggest-selling automaker in the United States. It shipped more than 2.3 million vehicles to the US last year, while US industry leader General Motors sold just 587 Chevrolets and 449 Cadillacs in Japan. US multinational carmaker Ford pulled out of Japan’s tough market about a decade ago. “They won’t take our cars, but we’ll take millions of theirs!” Trump said in April, accusing Japan of “very bad trade practices” with its ally.
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