Toyota slashes outlook on tariff concerns as profit plunges 37%

Toyota’s profit plunged 37% in the April-June quarter, the company said Thursday, cutting its full year earnings forecasts largely because of President Donald Trump’s tariffs.

The Japanese automaker said it based its report on the assumption that Trump’s tariffs on exports from Japan, including autos, would be 12.5% starting this month. As of now they stand at 15%.

The world’s top automaker also makes vehicles in Mexico and Canada. Toyota’s profit in the last quarter totaled 841 billion yen, or $5.7 billion, down from 1.33 trillion yen in the same period the year before. Its quarterly sales rose 3%.

The status of those exports is unclear since Mexico and Canada are beneficiaries of the U.S. Mexico Canada Agreement, renegotiated from a 1990s pact during Trump’s first term in office, that eliminated most tariffs and trade barriers between the three countries.

Toyota Motor Corp.’s April-June profit totaled 841 billion yen ($5.7 billion), down from 1.33 trillion yen in the same period of 2024. Quarterly sales rose 3% to 12 trillion yen ($82 billion).

Toyota said the tariffs cost its quarterly operating profit 450 billion yen ($3 billion). Cost reduction efforts and the negative impact of an unfavorable exchange rate also hurt its bottom line.

The company, which makes the Camry sedan and Lexus luxury models, forecast a 2.66 trillion yen ($18 billion) profit for the full fiscal year ending in March 2026, down from an earlier forecast for a 3.1 trillion yen ($21 billion) profit. Toyota earned nearly 4.8 trillion yen in the previous fiscal year.

“Despite a challenging external environment, we have continued to make comprehensive investments, as well as improvements such as increased unit sales, cost reductions and expanded value chain profits,” Toyota said in a statement that outlined its efforts to minimize the impact of the tariffs.

At the retail level, Toyota sold 2.4 million vehicles globally, with sales growing in Japan, North America and Europe from the previous year, when global retail totaled 2.2 million vehicles.

Analysts say Toyota is likely among the worst hit by the tariffs among global companies, even compared with other Japanese automakers.

Also Thursday, Toyota announced it was building a new car assembly plant in Japan that it expects to have up and running in the early 2030s. It is acquiring a site in Toyota city, Aichi Prefecture, central Japan, where the automaker is headquartered.

The models to be produced there are still undecided, but the plant will be part of the company’s plan to maintain a production capacity of 3 million vehicles in Japan, according to Toyota. Billed as “a plant of the future,” it will also feature new technology tailored for what Toyota said will be a diverse work force.

This story was originally featured on Fortune.com