Japanese automaker Toyota Motor cut its full-year operating profit forecast by 16% yesterday, expecting a loss of about $9.5 billion due to U.S. tariffs on imported cars, rising material costs, and a stronger yen. The estimated damage from tariffs highlights the increasing profit margin pressures across the automotive sector, as global car makers face higher costs from U.S. tariffs on vehicle imports, parts, steel, and aluminum. Toyota’s CFO, Takanori Azuma, said during a press conference, “Frankly, it is very difficult for us to predict what will happen regarding the market environment,” adding that the Japanese automaker will continue manufacturing cars for U.S. customers regardless of tariff impacts. The company lowered its operating profit forecast for the fiscal year ending March 2026 to 3.2 trillion yen ($21.7 billion), down from the previous forecast of 3.8 trillion yen. Toyota expects U.S.

tariffs to reduce its profits by 1.4 trillion yen ($9.5 billion) for the full year and had earlier estimated losses of about 180 billion yen for April and May but had not issued a full-year forecast until now. For the first quarter of the fiscal year, from April to June, Toyota reported operating profit of 1.17 trillion yen, down from 1.31 trillion yen the previous year but above the average estimate of 902 billion yen from seven analysts polled by the London Stock Exchange Group. Toyota’s North American operations turned to an operating loss of 63.6 billion yen in the first quarter from a profit of 100.7 billion yen the previous year, hurt by tariffs worth 450 billion yen. Under a bilateral agreement reached between Tokyo and Washington last month, Japanese car exports to the U.S. will face a 15% tariff, down from the previous 27.5%.

However, no timeline has been announced for the change to take effect, and Toyota’s shares fell 1.6% after the results announcement.