Japanese automakers looking at a ¥1 trillion hit from Trump tariffs

Japan Times

14-05-2025

Japanese automakers are buckling up for U.S. tariffs that might cost them hundreds of billions of yen a year; when all added up across the industry, maybe more than ¥1 trillion ($6.8 billion) in total.
The major carmakers, all of which had released earnings for the last fiscal year by Wednesday, said it's tough to factor the changing tariff situation into their forecasts, but they expect the new levies will cost them a lot no matter what happens.
Some manufacturers have indicated an intent to increase production in the United States.
'The business environment surrounding the auto industry has been changing drastically mainly due to trade policies,' said Toyota CEO Koji Sato during a news conference last week.
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Because of the uncertainty, Toyota was only able to offer an estimate of the tariff hit going out two months — April and May — saying it would be about ¥180 billion over that time period.
Sato indicated that Toyota would produce more vehicles for the U.S. market at its U.S. plants over the medium to long term.
He vowed to keep domestic production at 3 million units a year. Toyota has stressed the importance of keeping that level of production in Japan to protect head count and its supplier network.
'The most important thing is to maintain our core principles without wavering and not to panic. We will do what we can with our feet firmly on the ground,' Sato said.
Toyota also said it is not planning to increase vehicle prices to cover the tariff costs for now.
The U.S. introduced 25% tariffs on vehicles on April 3. This month, 25% tariffs on auto parts were also put into effect.
Nissan CEO Ivan Espinosa. Japanese carmakers warn that their earnings will be hit no matter how long U.S. tariffs last. |
Reuters
Japan is still negotiating with the administration of U.S. President Donald Trump and is seeking a complete elimination of the new tariffs.
In the United States, about 5.9 million cars from six Japanese automakers — made locally and imported — were sold last year.
Honda CEO Toshihiro Mibe said the effect of the tariffs would be 'very significant.'
The automaker expects to post ¥500 billion in operating profit this fiscal year, down from ¥1.2 trillion in the previous fiscal year. The tariffs would be a huge factor, as they would wipe out ¥650 billion in operating profit, Honda said.
Mibe stressed that the company's estimate is a conservative one, as Honda aims to implement countermeasures to mitigate the damage.
Nissan refrained from issuing profit guidance for the current fiscal year — which ends on March 31, 2026 — but projects tariff-related costs to amount to as much as ¥450 billion.
The company was in crisis even before the new tariffs were implemented.
Its models are outdated, and it is having trouble keeping up with technological change. Efforts to improve its lineup and cut costs have been slow and ineffective.
The Yokohama-based automaker announced Tuesday that it will cut about 15% of its total workforce and reduce the number of global production bases to 10 from 17.
Mazda did not issue an earnings forecast as uncertainties are making reasonable projections difficult. It said the tariffs added about ¥9 billion to ¥10 billion of costs in April alone.
Suzuki Motor does not sell cars in the United States. It does sell motorcycles and marine products in that market, however, and the company forecasts tariffs will cost it about ¥40 billion a year.