Toyota Motor Corp., the world’s leading automaker, reported a staggering 37% drop in its April-June 2025 quarter profit, totaling 841 billion yen (USD 5.7 billion), down from 1.33 trillion yen in the same period last year. The sharp decline, announced on Thursday, is primarily attributed to President Donald Trump’s newly imposed tariffs on Japanese exports, which the company estimates have reduced its quarterly operating profit by 450 billion yen (USD 3 billion). Despite a 3% rise in quarterly sales to 12 trillion yen (USD 82 billion), Toyota has revised its full-year profit forecast for the fiscal year ending March 2026 to 2.66 trillion yen (USD 18 billion), down from an earlier projection of 3.1 trillion yen (USD 21 billion).

The tariffs, set at 15% and expected to adjust to 12.5% this month, significantly impact Toyota’s exports from Japan, compounded by unfavorable exchange rates and the company’s cost-reduction efforts. Toyota, renowned for models like the Camry sedan and Lexus luxury vehicles, also manufactures in Mexico and Canada, where the U.S.-Mexico-Canada Agreement (USMCA) offers some tariff relief. However, uncertainties surrounding the agreement’s application to these exports persist, adding complexity to Toyota’s global operations.

Globally, Toyota sold 2.4 million vehicles at retail in the quarter, up from 2.2 million the previous year, with growth in Japan, North America, and Europe. Despite these gains, analysts note that Toyota faces disproportionate challenges compared to other Japanese automakers due to its heavy reliance on exports.

The company emphasized its proactive measures, stating, “Despite a challenging external environment, we have continued to make comprehensive investments, as well as improvements such as increased unit sales, cost reductions, and expanded value chain profits.” As Toyota navigates this turbulent economic landscape, its ability to adapt to tariff pressures and maintain global market leadership will be critical.