Japanese Carmakers Face $19 Billion Hit From Trump’s Tariffs
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Japan’s biggest carmakers are looking at a hit of more than $19 billion from President Donald Trump’s tariffs that have left the global auto industry reeling.
The industry’s top brands warned of a weaker financial performance this year, or withheld guidance altogether, as they tallied up the potential cost of Trump’s ever-changing policies on imports of cars and auto parts. The impact is likely to linger for years as the uncertainty spurs carmakers to rethink their North American investment and production.
Toyota Motor Corp., the world’s biggest carmaker, is likely to be the worst hit. It said last week it expects a 180 billion yen ($1.2 billion) impact to operating income in April and May alone. The figure could be as much as $10.7 billion for the whole fiscal year, according to Bloomberg Intelligence. Pelham Smithers analyst Julie Boote forecasts between $5.4 billion and $6.8 billion.
Nissan Motor Co. and Honda Motor Co. both estimate a $3 billion impact. Subaru Corp., which imports roughly half of the cars it sells in the U.S., also skipped annual guidance as it predicted a $2.5 billion dent. Mazda Motor Co. forwent a full-year outlook.
Most vehicles imported into the U.S. were hit with a 25% duty April 3, while most auto parts became subject to that levy as of May 3. There are some executive orders that prevent tariffs from doubling up, but the policies are expected to add thousands of dollars to the price of cars in the U.S.
The U.S. is the biggest market for Japan’s top carmakers, which utilize factories in Mexico or Canada to build vehicles that are then sent across the border. But Trump’s import tariffs now make that an expensive, if not unviable, practice and left companies struggling with the costly dilemma of how to overhaul their supply chains to escape the duties.
Japanese carmakers are now hoping that trade negotiations will offer a reprieve as talks with the U.S. likely accelerate later this month. Prime Minister Shigeru Ishiba has vowed not to accept any deal that doesn’t address auto tariffs, given the sector’s importance for the economy.
In the meantime, companies are already rethinking their operations.
Honda said this week it’s postponed by two years plans to spend C$15 billion ($11 billion) to build out its electric vehicle supply chain in Canada, including a factory that could produce 240,000 cars a year. It’s already shifting production of the hybrid version of its Civic from Japan to the U.S. Almost 40% of the roughly 1.4 million cars it sold in the U.S. in 2024 were imported, according to Bloomberg Intelligence.
Meanwhile, Subaru said it’s reviewing all of its investments, including the development of EVs. Nissan has halted U.S. orders for SUVs built in Mexico, and Mazda is stopping exports to Canada of one model that’s manufactured at an Alabama factory that’s a joint venture with Toyota.
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For now, Toyota appears to be taking a longer-term view. The carmaker hasn’t shifted any output since tariffs took effect, and CEO Koji Sato said last week it’ll consider building out its production footprint in the U.S. in the medium to long term.
The tariffs are a particularly hard blow for Nissan, which is already in the throes of its worst crisis in a quarter century. The carmaker has vowed to cut 20,000 jobs and shut seven production facilities.
Even with the extensive restructuring, Nissan finds itself in urgent need of a financial lifeline after talks to combine with Honda collapsed earlier this year.
“Nissan’s plight could have been minimized if it had taken these steps sooner,” said Bloomberg Intelligence senior auto analyst Tatsuo Yoshida. “The impact of these measures, compared to what other carmakers are doing or even what Nissan has done in the past, is unclear.”
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