The Japanese automaker Toyota is bracing for multi-billion-euro costs due to U.S. import tariffs and has lowered its full-year profit forecast as a result.

Toyota announced on Thursday that U.S. duties are expected to reduce its earnings by approximately €8 billion, a significantly higher impact than its competitors. U.S. market leader General Motors is projecting up to $5 billion in costs, while Volkswagen reported a €1.3 billion burden for the first half of the year. BMW and Mercedes-Benz anticipate that U.S. tariffs will reduce their 2025 car profit margins by 1.25% and 1.5% respectively, which translates to low single-digit billion-euro amounts.

"Frankly, it is very difficult for us to predict how the market environment will evolve," Chief Financial Officer Takanori Azuma said during a presentation. Nevertheless, Toyota will continue producing vehicles for U.S. customers despite the tariffs. The company now expects operating profit for the fiscal year ending March 2026 to reach about €18.8 billion--16% less than previously forecast. This comes despite record production and sales in the first half of 2025, totaling around five million vehicles.

In the most recent quarter from April to June, Toyota's operating profit fell to €6.9 billion from €7.7 billion in the same period last year. Tariff-related costs were particularly evident in the North American business, where the first quarter of the fiscal year saw an operating loss of €374 million, compared to a €592 million profit a year earlier.

The U.S. is treating Japanese automakers the same as their European counterparts. This spring, the import tariff was raised from 2.5% to 27.5%, though it is expected to drop to 15% soon. However, a timeline for implementing the reduced rate for Japan has yet to be announced. Similarly, a legally binding order from U.S. President Donald Trump to roll back the car tariff for Europe is still pending, even though the general tariff of 15% has been in effect since August 7.

(Reporting by Daniel Leussink and Ilona Wissenbach, edited by Sabine Wollrab. For questions, please contact the editorial management at frankfurt.newsroom@thomsonreuters.com)