Toyota Predicts 21% Profit Decline Due to Tariffs

Toyota Motor is projecting a significant drop in profits for this fiscal year, which ends in March 2026. Costs related to U.S. tariffs and a rising yen could lead to a 21% drop in operating income for the world’s top-selling auto manufacturer.

Last fiscal year, Toyota’s profit hit 4.8 trillion yen, or about $33 billion. Yet, the Japanese company is projecting only 3.8 trillion yen ($26 billion) at the end of this year.

Toyota leadership acknowledged the uncertainty related to U.S. tariffs and how they will influence global trade. Plus, tariffs could potentially lead to price increases in the States, which means consumers are more cautious about buying.    

“Whether these tariffs are permanent or not, and what will happen is not something we can decide,” said Toyota CEO Koji Sato, per Reuters.

Time will tell if this translates to price increases for Toyota vehicles in the U.S. Earlier this week, American rival Ford blamed tariffs when it announced price hikes for models produced in Mexico.

“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,” Christopher Richter, an autos analyst at brokerage CLSA, told Reuters.

Tariffs Spark Panic Buying, With Toyota and Other Automakers Seeing Sales Surge

Not only are the uncertainties surrounding President Donald Trump’s tariffs leading to business indecisions, but they have also led to panic buying among consumers. Fearing higher prices are coming, consumers have been keeping car dealers busy by making vehicle purchases now instead of potentially paying more later. As a result, every major automaker reported a surge in vehicle sales in recent months.

Toyota Motor North America, which includes both Toyota and Lexus brands, sold 231,335 vehicles in the U.S. in March alone, an increase of 7.7% compared to March 2024. For the first quarter of 2025, U.S. sales reached 570,269 units, which is almost 1% higher than the year-ago period.

Other foreign automakers announced impressive U.S. sales figures. In April, Hyundai sold 19% more units than it did during the same month last year. At the same time, Kia sales increased 14%.

In America, Ford reported a significant rise in sales last month, per the Detroit Free Press. The Detroit automaker delivered 208,675 new vehicles, well over the 179,588 it sold in April 2024. Not to be outdone, General Motors announced a 20% increase in U.S. sales for the month.