Toyota boosts guidance despite $3B tariff hit, sees nearly $10B in duties for fiscal year

Toyota (TM), the world’s largest automaker, is chugging along despite steep tariff hits to its business.

The Japanese automaker said the impact of tariffs in its fiscal second quarter hit 450 billion yen ($2.93 billion), with its year‑to‑date amount hitting 900 billion yen ($5.86 billion).

Toyota also raised its full‑year tariff projection to 1.45 trillion yen ($9.43 billion) from its previous outlook of ¥1.40 trillion ($9.11 billion).

“Despite the impact of US tariffs, strong demand supported by product competitiveness has led to increased sales volumes mainly in Japan and North America and expanded value chain profits,” Toyota said in a statement.

However, Toyota reported revenue of 12.38 trillion yen ($80.54 billion) for the quarter, up 8.2% compared to a year ago, with operating income coming in at 839.5 billion yen ($5.46 billion), down 27.4% due to the tariff impact and currency exchange headwinds.

Strength in its business allowed Toyota to up its fiscal year 2026 sales forecast to 49 trillion yen ($318.8 billion), up from 48.5 trillion yen, with operating income seen at 3.4 trillion yen ($22.1 billion), from 3.2 trillion yen.

Toyota said factors such as volume and model mix, cost reductions, and value chain profits helped offset tariffs and currency exchange costs.

Toyota, which builds a number of products in North America for the US market, is trying to offset that tariff impact by building more vehicles in America.

President Trump indicated last week during his Asia visit that the automaker had promised a new $10 billion investment in the US, adding that Americans should “go out and buy a Toyota.” However, a Toyota source told Reuters no explicit guarantee was made.

“As we’ve done for 68 years, Toyota will continue to invest in US operations, staying true to our principle of building where we sell and buying where we build. This effort aligns with President Trump’s emphasis on growing investment and manufacturing in America and underscores our enduring commitment to US manufacturing, supply chains, jobs, and customers. More details will follow soon,” a Toyota spokesperson told Yahoo Finance, neither confirming nor denying the report.

Regardless, success in North America — Toyota’s largest market by volume — is crucial for the automaker.

Toyota’s engineering and operating prowess made it the world’s largest automaker, with an operating margin of 10% last year, better than its rivals. With its operating margin dropping to 6.8% in its latest quarter, the question is whether Toyota can regain its operational excellence in a challenging trade and uncertain global economic environment.