Tariffs aren't just a nuisance for U.S. importers—they're now threatening to carve a massive chunk out of Toyota's (NYSE:TM) profits.
The world's top-selling automaker says U.S. import duties on cars, parts, steel, and aluminum will slash operating profit by roughly $9.5 billion.
The announcement, based on a new forecast shared last week, prompted Toyota to cut its full-year operating profit outlook by 16%, from about $25.8 billion to $21.7 billion. It's a rare pullback for a company that has managed to post record global sales despite rising costs, currency swings, and a stubbornly unpredictable trade climate.
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"It's honestly very difficult for us to predict what will happen regarding the market environment," Toyota's head of finance Takanori Azuma said in a briefing, according to media reports. Even so, he insisted Toyota will continue making cars for U.S. customers regardless of the tariff burden.
The $9.5 billion figure isn't just Toyota's direct bill—it also factors in strain on suppliers, especially those in the U.S. who rely on Japanese-made parts.
By comparison, General Motors (NYSE:GM) has projected a $4 billion–$5 billion tariff hit for 2025, while Ford (NYSE:F) expects around $3 billion. Toyota's estimate reflects the company's global footprint and the exposure of its cross-border supply chain.
That supply chain is exactly where the pain is multiplying. Toyota's North American operations swung from a 100.7 billion yen profit (about $703 million) in the same quarter last year to a 63.6 billion yen loss this year. Tariffs alone added about 450 billion yen to its costs.
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Because Toyota builds vehicles and components across the U.S., Canada, Mexico, and Japan, many products cross borders multiple times before they reach dealerships—racking up multiple rounds of duties along the way.
Yet, production hasn't slowed. In the first half of 2025, Toyota turned out a record 1.1 million Toyota and Lexus vehicles in North America, including more than 700,000 assembled in the U.S. Globally, it logged record output and sales, driven by surging demand for hybrids in North America, Japan, and China.
The automaker is also thinking long term. It recently unveiled plans for its first new domestic plant in Japan since 2012, scheduled to open in the early 2030s. The move is bold, given Japan's shrinking car-buying population and a steady decline in ownership, but Toyota says it's preparing for evolving transportation needs.
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For consumers, Toyota hasn't confirmed whether tariffs will lead to higher prices. Industry analysts caution that if elevated costs persist, buyers may eventually face fewer dealer incentives, limited model choices, or outright price hikes that could add thousands to a new vehicle.
There's a glimmer of potential relief. Under a trade agreement announced last month, U.S. tariffs on Japanese auto exports could drop from 27.5% to 15%. The problem? No one knows when the lower rate will take effect. Toyota's forecast builds in some expected savings, but not enough to offset the overall impact.
For now, Toyota is navigating a landscape where record sales coexist with record costs—and where even a company of Toyota's size admits the road ahead is "very difficult… to predict."
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