TOKYO: Toyota Motor expects profit to decline by a fifth in the current financial year, it said on Thursday, as weakness in the US dollar and the impact of President Donald Trump’s tariffs weigh on the world’s largest automaker.
In the latest example of how global trade disruption is hitting bottom lines, the world’s top-selling car manufacturer said it expected operating income to total 3.8 trillion yen ($26 billion) in the year to March 2026, versus 4.8 trillion yen in the year that just ended.
Currency was the biggest single impact on the forecast, with the declining dollar versus the yen expected to lop off 745 billion yen, Toyota said.
Recent pressure on the dollar has been seen as a byproduct of uncertainty around Trump’s tariffs. Toyota estimated the tariffs themselves costing it 180 billion yen in April and May.
Operating profit for the three months through March was nearly flat, rising 0.3% to 1.12 trillion yen.
Toyota faces the risk of being hit by widespread fallout from Trump’s tariffs, not only from the impact on its US-bound exports but also because of the potential for a downturn in consumer sentiment, in the US and elsewhere.
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Price rises can lead to a decline in consumer sentiment in the US and elsewhere.
The lower profit for the coming year was due to the negative impact from a stronger yen, as well as higher material prices and the impact of tariffs, Toyota said in a presentation.
Like other global automakers doing business in the world’s top economy, Toyota could face high labour costs and be forced to spend more on investment if it decides to expand its US production base further.
While Toyota has seen its vehicle sales in China fall less than other Japanese automakers, it has still struggled to halt a sales decline in the world’s biggest auto market amid heavy competition from Chinese brands.
Japan, Toyota’s most profitable market, was the sole bright spot with a 18% profit increase in the fourth quarter.
Operating loss in North America, its biggest market, widened to 100 billion yen from 28 billion yen a year earlier, hit by restructuring of its Indiana plant.
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