Toyota Has The Most To Lose In A Global Trade War

The U.S. government’s sudden desire for new trade deals with other countries has resulted in massive tariffs being levied on non-American parts and vehicles coming into the country, which means foreign-made vehicles are about to get a lot more expensive. That’s bad news for everybody who has spread out their manufacturing globally, including most American automakers, who have already announced that they no longer expect the earnings projections they once reported for 2025. But it’s even worse for basically all the Japanese automakers who operate in the U.S. market, as it’s been a point of pride (and quality) to have localized production in Japan up until now. The 4Runner is an example of one of these great global cars.

Out of the main Japanese automakers, Toyota has come forward as the biggest victim, at least so far. That makes sense, because it’s also the biggest player in the field of Japanese automakers, so it’s somewhat predictable that it has the hardest hit to take. But just how bad is it?

Toyota Is Bleeding Cash

As Automotive News Europe points out, Ford announced an anticipated $1.5 billion drop in full-year profit, General Motors announced a massive $5 billion profit hit for the year, but for Toyota, it’s projecting a loss of $1.2 billion in just two months of the year, with the rest of the year for those losses to add up. It’s so bad, Toyota either won’t say or doesn’t know just how bad the hit will be for the full year yet. Projected operating income for Toyota for the March 2026 fiscal year has been scaled back by ¥0.9 trillion (roughly $6.1 billion). It’s been reported that a Japanese automaker, likely Toyota, is losing $1 million per hour from current tariffs.

There are currently ongoing trade negotiations regarding the tariffs between Japan and the US that started in February, but there’s no solid update or prediction of where the two parties will land on a deal. The next round of negotiations takes place this month and automakers are hopeful it will translate to a deal by June. Japan currently pays a 25% duty on imported vehicles as of April 3, and the same percentage on auto parts as of May 3, though it’s unclear exactly when and where those two double up on certain models.

A Deal Could Come In June

The US currently has a $68.5 billion trade deficit with Japan, which some believe could make a deal more difficult to work out, as Japan’s markets will likely have to make steep concessions or consider moving more manufacturing stateside, which is the stated goal of the U.S. tariffs. A recent deal with Mexico may have eased some of the pressure on Toyota and other Japanese automakers like Nissan and Mazda with a footprint in America’s neighbor. Both Nissan and Mazda have already recently had to shift engine and vehicle shipment plants across the border due to tariffs.

The U.S. market accounted for a quarter of Toyota’s 10.8 million vehicle sales globally last year, and the company builds around a million vehicles in the U.S. already. However, it still produces more than 3 million vehicles in Japan annually. Best-selling models like the RAV4 and Corolla are assembled in the U.S., with many other vehicles coming over the border from Canada and Mexico.

Toyota only imported around 281,000 vehicles to the U.S. last year from Japan itself, but that’s still enough to dramatically raise prices if tariffs are added to those models.

Toyota argues that it’s invested more than $20 billion in the US since Trump’s first term, it’s building a new battery plant for future models in the country, and its existing facilities in the US are nearly maxed out in capacity. It also boasts that it increased its number of U.S. workers from 25,000 in 2016 to 31,000 today.

Source: Automotive News