Toyota’s Bumpy Ride

In Short: Toyota has warned it faces a ¥1.4tn (£7.1bn) hit from Donald Trump’s trade tariffs, prompting a profit downgrade and a drop in quarterly earnings. The car giant is feeling the heat as new “reciprocal” tariffs take hold — with Japan now facing a 15% levy on car exports to the US.

What’s Going On?
Toyota’s outlook just got dented. The world’s largest carmaker has slashed its annual profit forecast by 16%, blaming Trump’s tariffs, pricier materials, and a stronger yen. Its quarterly profit also dipped nearly 11%. Rival Honda is hurting too — it posted a 50% profit drop after a ¥124bn tariff bill.

The root of the problem? Trump’s latest tariff blitz. Dozens of countries are now facing elevated US import duties. Japan’s deal with Washington trimmed sector-specific tariffs from 27.5% to a flat 15% — still a painful hit for carmakers. Autos are critical to Japan’s economy, making up over 25% of its US exports.

Insights
For the auto industry, this is a full-blown risk to global strategy. Carmakers are being forced to rework supply chains, rethink pricing, and possibly shift production to dodge levies. And while hybrids are keeping Toyota’s sales humming, Wall Street hates uncertainty — hence the 10% share price slide this year. The big picture? Trump’s trade policies are reshaping the rules of the road for the world’s biggest exporters.

How Does This Impact Law Firms?