Japan's Auto Giants Are Expecting Pain Despite Trump Trade Deal

New York Times

07-08-2025

Japan's automakers, which sell more cars in the United States than anywhere else, are expecting little financial relief from the country's recent trade deal with President Trump.
The agreement between Tokyo and Washington last month promised to lower U.S. tariffs on imported cars and parts to 15 percent. While that was a significant reduction from the current 27.5 percent, this rate is still six times higher than what imports from companies like Toyota, Honda and Nissan were subject to earlier this year.
Two weeks after the deal was announced, the new lower rates have not taken effect and there is confusion about when they will. Coupled with a more sober view of their impact on profits, even the lower tariffs are casting a pall over the earnings outlooks of Japanese automotive giants.
On Thursday, Toyota lowered its forecast for operating profit for the year by $4.1 billion to $21.7 billion, citing a $9.5 billion impact from tariffs. On Wednesday, Honda said that tariffs on cars shipped to the United States from Japan, Canada and Mexico, as well as on auto parts and raw materials, would cost it about $3 billion in operating profit this year. This was some $1.4 billion less than it had previously expected, but still represents a big hit.
'It's still not clear to us what the conditions are, and when the change for tariffs from Japan to the U.S. will come into place,' the Nissan chief executive, Ivan Espinosa, said last week. Nissan lowered its estimated hit to profits from tariffs this year but still projected it at about $2 billion.
The initial feeling for some in Japan was 'the tariffs are lower than we feared, and the issue is over. It's resolved,' said Richard Katz, an economist and longtime observer of the Japanese economy. 'My take was: you threaten to cut off both my legs, but you only amputated one. So we're happy?'
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