Toyota Motor cuts annual operating profit forecast after earnings beat as U.S. tariffs bite

Net income attributable to the company fell 37% to 841.3 billion yen.Toyota revised down its full-year operating income forecast by 600 billion yen to 3.2 trillion yen for its financial year ending in March 2026."Due to the impact of U.S. tariffs and other factors, actual results showed decreased operating income, and the forecast has been revised downward," the company said in an earnings release.In its country of Japan, the company said that operating income was weighed down by the impact of exchange rate fluctuations and increased expenses.While fit fell, Toyota has seen strong global demand and the automaker last week reported record worldwide sales in the first half of the year. "Despite a challenging external environment, we have continued to make comprehensive investments and as well as imvements such as increased unit sales, cost reductions, and expanded value chain fits, thereby minimizing negative impacts," the company said.Japanese carmakers have been hit by U.S

Peers such as Honda have also reported a drop in fit, as they cut prices in order to maintain market in the U.S."Japanese automakers faced significant fit pressure earlier this year due to elevated U.S. import tariffs and a stronger yen," automotive analyst at Counterpoint Re Abhik Mukherjee, told CNBC."Although vehicle export volumes to the U.S. held up, the higher costs from tariffs had to be partially absorbed, squeezing margins," he added.In June, the value of Japan car exports to the U.S. fell 25.3% year over year, even though car export volumes to the U.S. rose by 4.6% in the same period, according to data from Japan's trade ministry.Trump, however, announced a new trade deal with Tokyo last month with tariffs expected to fall to 15%, though the timeframe for the change remains un.In light of the Japan-U.S. agreement, Toyota said it was expecting a full financial year impact of 1.4 trillion yen on fits."Automakers still face margin compression from the strong yen and lingering cost burdens from earlier tariffs

However, the 15% rate, combined with localization and pricing adjustments, should gradually stabilize earnings," Mukherjee said."Longer-term, Japanese brands may gain an edge over NAFTA-region competitors that still face higher tariffs, supporting a slow but steady recovery," he added

The NAFTA or North American Free Trade Agreement includes Canada, Mexico, and the U.S.Auto exports to the U.S. are a cornerstone of Japan's economy, making up 24% of its global auto shipments in 2024, according to Japan's customs data.