Toyota has warned it expects to take a ¥1.4 trillion (A$13.8 billion) hit from U.S. trade tariffs as it posted weaker quarterly profits and downgraded its earnings outlook for the 2026 financial year.

The Japanese carmaker now forecasts an operating profit of ¥3.2 trillion (A$31.5 billion) to March 2026, down 16 per cent from its earlier ¥3.8 trillion (A$37.4 billion) guidance. The anticipated annual impact includes higher levies on Japanese vehicle exports to the U.S., increased material costs, and the effects of a stronger yen.

The warning comes as the latest wave of Donald Trump’s country-specific tariffs took effect, raising rates on imports from dozens of countries. Under a new framework agreed between Tokyo and Washington last month, Japanese automotive exports will face a 15 per cent tariff – lower than previous sector-specific duties of up to 27.5 per cent – though the implementation date has yet to be confirmed.

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For the April-June quarter, Toyota’s operating profit fell 11 per cent year-on-year to ¥1.17 trillion (A$11.5 billion). Rival Honda was also hit hard, reporting a 50 per cent slump in profit to ¥244 billion (A$2.4 billion), citing a ¥124 billion (A$1.2 billion) tariff-related hit.

The automotive sector has been among the hardest hit by Trump’s trade policies. It accounts for about 8 per cent of jobs in Japan, with vehicles and parts making up over a quarter of the country’s exports to the U.S.

As part of the bilateral deal, Trump announced Japan would invest US$550 billion (A$820 billion) in the U.S., while pledging to open Japan’s market to more American cars, trucks, rice, and agricultural products.

Despite trade headwinds, Toyota achieved record first-half sales, delivering 5.1 million vehicles globally – up 5.5 per cent – fuelled by strong demand for its hybrid models. However, the company’s share price has fallen more than 10 per cent this year as investors weigh the uncertainty over U.S. tariffs.

Trump’s latest tariffs also target other nations, with rates exceeding 40 per cent for imports from Syria, Laos, and Myanmar, 15 per cent for the EU, and 10 per cent for the UK. The measures are part of the administration’s “reciprocal” trade strategy aimed at rebalancing U.S. trade relationships.