Toyota Motor Corp. is the most important carmaker on the planet — and in addition the auto trade’s greatest loser in relation to projected losses from US President Donald Trump’s commerce battle.
Duties on imported vehicles and auto components compelled Normal Motors Co. to slash its full-year revenue steering by as a lot as $5 billion whereas Ford Motor Co. is bracing for a $1.5 billion annual hit. Toyota sees a $1.2 billion revenue drop in simply two months. Whereas the Japanese automaker didn’t present a tally for all of 2025, it did mission working revenue of ¥3.8 trillion ($26.1 billion) for the fiscal 12 months ending March 2026 — far beneath the ¥4.7 trillion anticipated by analysts.
Whereas Toyota has elevated native manufacturing within the US to greater than half of gross sales within the nation, it nonetheless depends on imports of key car components and fashions — to the tune of some 1.2 million vehicles a 12 months. The White Home has observed, with Trump calling out the Toyota Metropolis-based automaker by identify throughout his contentious Liberation Day speech within the Rose Backyard on April 2. He complained about Toyota’s “a million overseas made cars” bought within the US.
The large tariff hit displays the corporate’s resolution to carry the road on sticker costs at US sellers and manufacturing volumes at its 11 American factories amid the beginning of bilateral commerce negotiations between the US and Japan. These talks began in February and it’s unclear when they are going to conclude with a deal.
“On the subject of tariffs, the small print are nonetheless extremely fluid,” Toyota’s Chief Govt Officer, Koji Sato, mentioned final week after releasing the newest monetary outcomes. “It’s troublesome to take steps or measure the affect.”
Japan’s chief commerce negotiator, Ryosei Akazawa, mentioned on April 30 that one unnamed Japanese automaker is presently shedding round $1 million per hour from the tariffs, citing a calculation made by an unidentified company govt. A Japanese authorities official on Friday declined to supply extra specifics. However that charge of loss isn’t too far off the mark from the $1.2 billion hit Toyota is projecting primarily based on 730 hours monthly. Representatives for Toyota additionally didn’t reply to a request for remark.
Akazawa has expressed hope that an settlement may very well be reached in June with the following spherical of negotiations happening in late Could.
Most imported autos turned topic to a 25% US responsibility on April 3 whereas most auto components turn out to be topic to that levy as of Could 3. There are some govt orders that forestall duties from doubling up however contemplating the US is the greatest market for Japan’s 5 largest carmakers, even a reasonably improve in tariffs can have an outsized affect on their backside traces.
Learn extra: Trump Tariffs Already Hitting Some Japanese Companies, Survey Reveals
The Trump administration reached its first commerce deal on Could 8 with the UK. However the US had a $11.9 billion items commerce surplus with the UK final 12 months, whereas it ran a $68.5 billion deficit with Japan. Which will make it harder to safe an settlement with out vital concessions by one aspect.
“The hurdle is excessive for Japan to get auto tariffs lowered” on exports to the US, mentioned Hiroshi Namioka, chief strategist at T&D Asset Administration Co. “On the identical time, the auto trade is just too necessary for Japan to easily associate with what the US needs.”
Some Japanese automakers have responded to the robust new commerce surroundings by making modifications to their world manufacturing footprints. Nissan Motor Co. halted US orders for SUVs in-built Mexico whereas Honda Motor Co. is shifting manufacturing of the hybrid model of its Civic from Japan to the US. Attributable to retaliatory tariffs towards the US, Mazda Motor Co. is stopping exports to Canada of 1 mannequin that’s manufactured at an Alabama manufacturing unit that’s a three way partnership with Toyota.
Japan Manufacturing Pledge
Toyota has already invested closely to construct out its US operations — together with spending $13.9 billion on a new battery plant in North Carolina. However it additionally stays dedicated to sustaining its intensive home manufacturing base. Chairman Akio Toyoda has repeatedly pledged to maintain making a minimum of three million autos a 12 months in Japan. Final 12 months, the corporate constructed 3.1 million vehicles in its house nation, a few third of its worldwide manufacturing whole.
Globally, Toyota bought 10.8 million vehicles in 2024, with the US accounting for rather less than 1 / 4 of these. Whereas half have been made domestically and one other 30% got here from neighboring Canada and Mexico, some 281,000 autos have been imported from Japan. That features standard fashions such because the 4Runner mid-sized SUV, Prius hybrid and a number of other upscale Lexus autos.
The corporate’s best-sellers within the US — the RAV4 hybrid crossover and Corolla compact sedan — are assembled at factories in Kentucky and Mississippi. However gas-only RAV4s are imported from Canada and the plug-in hybrid comes from Japan. Corolla fashions variants just like the sporty GR, sensible hatchback and gas-electric hybrid additionally carry made-in-Japan labels.
That publicity places Toyota within the crosshairs of the Trump administration and means the automaker has loads using on the result of the US-Japan commerce negotiations.
The carmaker has quietly pushed again on the White Home’s critique, noting by way of a spokesman that it’s dedicated to spend virtually $21 billion within the US simply since 2020. That’s practically double the pledge it made throughout Trump’s first administration — after equally coming below assault by the US president. Toyota additionally mentioned has elevated direct manufacturing employment within the US to 31,000 employees, up from 25,000 in 2016.
One subject it faces: A extreme restraint on flexibility at present manufacturing amenities within the US, which might have an effect on its means to shift autos from abroad vegetation. Toyota’s manufacturing unit in Georgetown, Kentucky — the oldest and largest of its US vehicle-assembly operations — has no slack for brand spanking new fashions. It was operating full-tilt at practically 100% of its most capability as of late April, in accordance with a US-based consultant for the corporate.
This story was initially featured on Fortune.com
