Toyota Motors has announced that it anticipates a 20 percent drop in profit for the current financial year, as the weakening U.S. dollar and the impact of President Donald Trump’s tariffs place pressure on the global automotive leader.
In the latest sign of how ongoing trade tensions are affecting major international businesses, the world’s largest carmaker said it forecasts operating income of 3.8 trillion yen (approximately $26 billion) for the fiscal year ending March 2026. This represents a significant decrease from the 4.8 trillion yen recorded in the previous year.
The company’s latest financial outlook highlights the multi-faceted strain tariffs can place on multinational operations. While Toyota estimates direct losses from the tariffs at 180 billion yen during April and May alone, it identified currency fluctuations as the most substantial threat to its earnings this year, projecting a 745 billion yen impact from exchange rate movements.
The uncertainty surrounding U.S. trade policy has contributed to a decline in the dollar’s value. For a company like Toyota, which earns a considerable portion of its revenue in the United States, a weaker dollar translates to reduced profits when converted back to yen.
Chief Executive Koji Sato, speaking at a press briefing, admitted the lack of clarity around the tariff situation has made business planning especially challenging. “Whether these tariffs are permanent or not, and what will happen is not something we can decide,” Sato said.
Analysts have cautioned that sustained tariffs could result in higher consumer prices in the U.S. and beyond, potentially dampening buyer sentiment and further weakening demand in the automotive sector.
