Toyota Motor Corporation has slashed its full-year profit forecast after revealing a staggering $9.5 billion hit from newly imposed global tariffs, coupled with currency headwinds from a stronger yen.
In its latest financial update, the world’s largest carmaker reported a sharp 37% year-on-year drop in net profit for the first quarter, signalling tough times ahead for the Japanese auto giant. Net profit came in at ¥897 billion ($6.2 billion), significantly down from ¥1.41 trillion during the same period last year.
The sharp fall was largely attributed to newly announced tariff measures that are set to impact Toyota’s global operations, especially exports to key markets such as the United States and Europe. Analysts say the levies could dramatically inflate production and logistics costs, forcing the automaker to revisit pricing, production strategy, and regional investments.
Toyota also flagged the rising strength of the yen as another major drag on earnings. The yen’s appreciation against the dollar and other currencies has eroded overseas profits when converted back into Japan’s local currency.
Despite strong global demand for hybrid and electric models — notably the Prius, RAV4 Hybrid, and the bZ4X EV — Toyota warned that global trade dynamics are placing unprecedented pressure on its supply chains and cost structures.
The company has now downgraded its full-year net profit forecast to ¥2.92 trillion ($20.3 billion), down from an earlier projection of ¥3.57 trillion. This revision marks a cautious turn from a company that has largely been seen as resilient during global economic turbulence.
“We are facing a perfect storm of rising tariffs, volatile currencies, and shifting regulatory environments,” said Koji Sato, President and CEO of Toyota Motor Corporation. “While our commitment to innovation and global mobility remains strong, we must be agile in navigating these external shocks.”
Toyota said it will continue to prioritise operational efficiency, localised manufacturing, and strategic partnerships as it adapts to a rapidly evolving global trade landscape.
Shares in Toyota dipped 2.3% following the announcement. Analysts anticipate further market reaction as the full implications of the tariffs become clearer.
