By Ogungbayi Beedee Adeyemi
adeyemi@ddnewsonline.com
Major Japanese automakers have issued stark warnings that President Donald Trump’s escalated trade tariffs will slash billions from their bottom lines, dubbing the import duties a “new normal” the industry must endure amid fears of a prolonged U.S.-Japan trade standoff.
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In a flurry of earnings reports this week, Toyota, Honda, and Nissan revealed massive profit hits, with Toyota alone projecting a $9.5 billion loss for the 2026 fiscal year due to the levies. Honda slashed its full-year forecast by 20% to $3.6 billion, while Nissan anticipates a $1.8 billion deficit – a break-even scenario derailed solely by tariffs.
“We thought it would be temporary, but now it is here to stay,” Nissan’s CEO Ivan Espinosa declared, echoing a grim consensus across Tokyo’s auto giants. The sector, Japan’s economic backbone, faces a collective $19 billion blow this year, per Bloomberg estimates, as the 15% tariff on autos and parts – down from Trump’s initial 27.5% threat – still erodes razor-thin margins.
Toyota’s net profit plunged 7% YoY to $11.5 billion for April-September, despite U.S. sales growth, as tariffs ripple through its supplier network. Honda’s CEO Toshihiro Mibe plans U.S. production shifts, including hybrid Civic lines to Indiana, to offset the $4.4 billion sting.
Japan’s central bank halved its 2025 growth forecast, blaming the “unprecedented” duties that threaten the auto sector’s 5 million jobs and 3% of GDP. Economists warn of a “hollowing out” as firms like Nissan slash 11,000 jobs and relocate manufacturing stateside.
U.S. Treasury Secretary Scott Bessent’s quarterly reviews could hike rates if Japan falters on concessions, including market openings for American cars a skeptical prospect, per experts. Ford’s CEO Jim Farley griped the deal gives Toyota a “$10,000 undercut” edge over U.S. rivals.
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Prime Minister Shigeru Ishiba called talks “earnest” but vowed resilience: “We’ll protect our industry while honoring commitments.” As Trump praises Toyota’s U.S. investments during his recent Japan visit, execs privately seethe over the “devastating tax.”
The “new normal” could spark broader U.S. auto price hikes, hitting American consumers amid Trump’s “America First” push.
DDNewsOnline