Reuters — 2025-05-08
Automotive Industry
Toyota Motor expects profit to decline by a fifth in the current financial year, it said on Thursday, as weakness in the U.S. dollar and the impact of President Donald Trump's tariffs weigh on the world's largest automaker.
In the latest example of how global trade disruption is hitting bottom lines, the world's top-selling car manufacturer said it expected operating income to total 3.8 trillion yen ($26 billion) in the year to March 2026, versus 4.8 trillion yen in the year that just ended.
Toyota's results also show how the tariffs have the potential to hit companies on a number of fronts simultaneously. While the automaker estimated the levies directly costing it 180 billion in April and May, it said currency movement would be the biggest single impact on its full-year forecast, at 745 billion yen.
Uncertainty around Trump's tariffs and their implication for global trade have weighed on the dollar. For Toyota, a weaker dollar means less profit when U.S. earnings are brought home.
Chief Executive Koji Sato told a press conference that details of the tariffs were largely unclear, adding to the difficulty in navigating them.
"Whether these tariffs are permanent or not, and what will happen is not something we can decide," Sato said.
Analysts have warned that tariffs could trigger rising prices for buyers in the United States and elsewhere, leading to a downturn in consumer sentiment.
Operating profit for the three months through March was nearly flat, rising 0.3% to 1.12 trillion yen.
There was a significant risk that Toyota could find it difficult for to achieve its new profit forecast if the tariffs were retained, said Christopher Richter, an autos analyst at brokerage CLSA.
"Right now, things are very rosy in the U.S. just because customers are panicking and rushing to the market to buy cars. But what happens if these tariffs continue? You need to raise prices," he said.
"Can you grow sales like that? I don't know."