Toyota Motor Corporation anticipates a financial impact of $1.64 billion CAD (180 billion yen) in April and May alone due to tariffs imposed by the United States. That will lead, it projects, to a 21-percent decrease in operating profit for the current fiscal year. The manufacturer is trying to offset that shortfall with an increase in global sales, better cost control and new revenue streams.
Overall sales on the rise despite uncertain climate
Despite a tense international trade environment, Toyota forecasts selling 9.8 million vehicles by March 2026, a 4.7-percent increase, driven by gains in all its key markets, including North America, Europe and Japan.
Return to full capacity in Indiana: A crucial lever for North America
The full resumption of production at Toyota’s Princeton, Indiana plant, which was suspended last year due to costly recalls of certain SUVs, should help the company catch up on delayed deliveries and thus boost North American sales figures.
Toyota anticipates operating profits will fall to $35.0 billion CAD (3.8 trillion yen) for the fiscal year ending in March 2026, compared to $44.4 billion CAD (4.82 trillion yen) last year. The profit margin is projected to shrink from 10 to 7.8 percent.
Tariffs, raw materials and exchange rates: A perfect storm
Customs duties are only part of the puzzle. Currency fluctuations are causing a projected loss of $6.88 billion CAD, and rising material costs a loss of $3.23 billion CAD.
However, Toyota projects stable revenues, forecasted at $442.4 billion CAD. Net profit, on the other hand, is down 35 percent to $28.3 billion CAD.
End of momentum, beginning of turbulence?
The new forecasts come as Toyota announced a 10-percent drop in its operating profit for the fiscal year ended March 31st, mainly due to rising labour and R&D costs. This ends an exceptional period for CEO Koji Sato, who last year celebrated historic sales and profit records.
Since then, the momentum has waned: operating profit fell by 28 percent in the last quarter of 2024, marking two consecutive quarters of decline after two years of growth.
Sales holding up in U.S… for now
U.S. sales climbed 10 percent in April, bringing the increase to 3 percent for the first four months of the year. But several analysts believe that’s likely a temporary bump as consumers try to get ahead of tariff-related price increases. It could be that demand has been “pulled forward” from the future, and sales will drop as the tariffs make themselves felt.
More domestic production in the future?
Toyota says it’s looking at strengthening production capacity in North America to reduce its exposure to the uncertainties of international trade. But for now, the manufacturer is staying the course while remaining cautious.