Toyota Motor June-quarter profit beats estimates — but drops 11% as U.S. tariffs bite

A sign with the Toyota logo in Surrey, England on August, 2023
Peter Dazeley | Getty Images News | Getty Images
Toyota Motor on Thursday reported higher-than-expected operating profit for the June-quarter, even as the world’s largest auto company by sales volumes grapples with U.S. tariffs.
Here are Toyota’s results compared with the mean estimates from LSEG:
- Revenue: 12.25 trillion yen vs. 12.19 trillion yen
- Operating profit: 1.17 trillion yen vs. 881.41 billion yen
Operating profit for the quarter, however, dropped 11% year on year, with the company ascribing 450 billion yen in losses to U.S. tariffs. Net income attributable to the company fell 37% to 841.3 billion yen.
Toyota also revised its full-year operating income forecast down 600 billion yen to 3.2 trillion yen.
“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.
While profit 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 improvements such as increased unit sales, cost reductions, and expanded value chain profits, thereby minimizing negative impacts,” the company said.
Japanese carmakers have been hit by U.S. President Donald Trump‘s 25% tariffs on imported vehicles, which came into effect in April. Peers such as Honda have also reported a drop in profit, as they cut prices in order to maintain market share in the U.S.
“Japanese automakers faced significant profit pressure earlier this year due to elevated U.S. import tariffs and a stronger yen,” automotive analyst at Counterpoint Research 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 unclear.
“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 about 24% of its global auto shipments in 2024, Japan’s customs data showed.