Japanese automakers Toyota and Honda take a big hit from Trump's tariffs

Core Insights - President Trump's tariff policy is significantly impacting Japan's auto industry, with Toyota expecting a reduction in operating income for the 2026 fiscal year by 1.4 trillion Japanese yen ($9.5 billion), which is 1.2 trillion yen higher than its initial forecast [1] - Honda reported a 50% year-over-year decline in operating profits, attributing a loss of approximately 122 billion Japanese yen to tariffs, with a potential total impact of 450 billion yen for the year [3] - A recent trade deal between the US and Japan has lowered tariffs on Japanese auto imports from 25% to 15%, providing Japanese automakers a competitive edge over American rivals like Ford and GM, who still face a 25% tariff [4] Company-Specific Insights - Toyota's operating income in North America has declined due to tariffs, with the company citing "exchange rate fluctuations and increased expenses" as contributing factors [2] - Honda has adjusted its full-year operating profit forecast upward by 40%, indicating that the impact of tariffs may be less severe than initially expected [3] - Ford's CEO expressed concerns that the trade deal gives Japanese automakers a "meaningful advantage," potentially allowing them to undercut Ford models by up to $10,000 [5]