Toyota expects its annual operating profits to fall by 20% as a weaker U.S. dollar and new trade tariffs under President Trump weigh heavily on earnings, the company announced Thursday.
The world’s largest automaker said it projects 3.8 trillion yen ($26 billion) in operating income for the fiscal year through March 2026– down from 4.8 trillion yen in the year just ended. Currency movement alone is expected to cost Toyota 745 billion yen, while tariffs added another 180 billion yen in losses during April and May.
During a press conference, CEO Koji Sato said, “Whether these tariffs are permanent or not, and what will happen is not something we can decide,” noting that the uncertainty surrounding Trump’s tariff measure complicates planning.
Further, the company posted flat earnings for the three months through March, with operating profits rising just 0.3% to 1.12 trillion yen.
Moreover, the trade restrictions are hitting Toyota on multiple fronts: reduced U.S. earnings due to exchange rates, increased investment costs if U.S. manufacturing expands, and potential price hikes that could dampen demand.
Meanwhile, North America—Toyota’s largest market—swung to an operating loss in the latest quarter. Japan remained the only bright spot, with an 18% profit increase in Q4, while the company continued to face steep competition in China, where sales are falling industrywide amid pressure from local brands.
Toyota’s warning underscores broader global concerns over rising trade barriers and their impact on the auto sector. Like its peers, the company now faces a complex mix of geopolitical risk, cost inflation, and softening global demand.
