Toyota Confronts $1.2 Billion Tariff Challenge Amid Trade Uncertainties
Toyota is facing a hefty tariff charge of $1.2 billion—an amount that represents just a couple of months of expenses, specifically for April and May.
The Japanese automotive manufacturer revealed this figure in its recent financial disclosures, shared on May 8. In the report, Toyota mentioned that it had “provisionally included” the estimated financial consequences of the tariffs implemented during the administration of former U.S. President Donald Trump.
For the fiscal year concluding in March 2025, Toyota anticipates material expenses of 350 billion yen. Nonetheless, this estimate excludes an additional 180 billion yen (around $1.2 billion) expected for tariff-related costs.
To provide context for the tariff challenge, Toyota announced a net profit of $32.7 billion for the fiscal year. The $1.2 billion in tariffs constitutes approximately 4% of that profit. The company also noted a 10.4% decline in operating profit year-over-year and is predicting a more pronounced 21% drop for fiscal 2026.
In spite of these financial pressures, Toyota experienced significant growth in electric vehicle (EV) sales. EVs—including hybrids like the Prius—made up 46.2% of total vehicle sales over the last year. The company sold an extra 850,000 EVs and anticipates that figure will increase, with EVs expected to constitute 50% of total sales by 2026. This transition occurs as some customers shift away from Tesla, partially due to controversies involving CEO Elon Musk, which could advantage competitors such as Toyota.
The financial report also highlighted the larger uncertainty present in the international trade sphere. The unpredictable implementation of the tariffs from the Trump era has caused widespread ambiguity and price surges. Toyota highlighted “challenges in predicting the business outlook due to the effects of U.S. tariffs and other variables” as a significant issue.
Other businesses are also experiencing the strain. Smart home technology company Wyze recently disclosed its own substantial tariff expenses on social platforms, while e-commerce sites like Shein and Temu are facing difficulties following the expiration of the de minimis import exemption on May 2.
According to the Wall Street Journal, Toyota’s financial report only accounts for tariff expenses from April and May since the situation is still highly variable. The U.S. and Japan are actively negotiating over Japan’s tariff rate, further complicating the outlook.
Toyota has yet to release an official statement regarding this issue. We will provide updates on this story if the company responds.