Trump tariffs split Japan Inc as Toyota cuts forecast while Sony, Honda raise

Business Times

3 days ago

[TOKYO] US President Donald Trump's tariffs are cleaving Japan Inc as some big exporters like Toyota Motor slash their profit forecasts while Sony and Honda are among those saying the impact will be less than they had feared.
As Trump's levies on global shipments into the US kicked in on Thursday, Japan's top companies offered a mixed picture of the impact of his signature economic policy and of the stronger yen on his country's fifth-largest trading partner.
Uncertainty over the tariffs and their erratic implementation have unnerved companies globally as governments work feverishly to strike deals and avert a crisis for their big exporters.
While glimmers of optimism have emerged for Japanese companies, the outlook remains overshadowed by uncertainty over when Trump will lower his tariffs on Japanese automobiles and new questions about duties on pharmaceuticals and semiconductors.
A Trump broadside on semiconductors, with 100 per cent tariffs on some chip imports to the US, hit Japanese chip supply-chain firms on Thursday, while shares of companies elsewhere with US expansion plans jumped.
Tokyo urged Washington on Thursday to swiftly implement last month's bilateral agreement lowering tariffs on US imports of Japanese cars to 15 per cent from the 27.5 per cent in total levies in place since Trump raised tariffs in April.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
Two weeks after Trump announced the deal, which he said included US$550 billion in Japanese investment and loans in the US, Tokyo is scrambling to clarify specifics, complicating business planning for the nation's biggest firms.
'Difficult to predict'
'It's honestly very difficult for us to predict what will happen regarding the market environment,' Takanori Azuma, head of finance for Toyota, the world's biggest automaker, said on Thursday.
Toyota cut its operating-profit forecast for the business year to March by 16 per cent to 3.2 trillion yen (S$27.8 billion), citing the tariffs and the yen.
The company will keep making cars for US customers regardless of any impact from the tariffs, Azuma told a briefing on the business results.
'Even at this point, incentives are very low and inventory is limited, so many customers are waiting. That's true not only in the US, but also in Japan.'
Japan's carmakers are among the hardest hit in the trade war as they resist raising prices, squeezing their profit margins.
In contrast to Toyota, Sony raised its full-year profit forecast by 4 per cent to 1.33 trillion yen (S$11.5 billion), with the impact from US tariffs now expected to be 70 billion yen, down from the 100 billion yen it forecast in May.
Subaru Corp said the tariff impact on its vehicles has been reduced but remains significant.
Made in USA exemption
Toyota shares fell 1.5 per cent, while Sony jumped 4.1 per cent and Subaru rose 2.6 per cent.
Honda on Wednesday cut its expected tariff impact by 31 per cent to 450 billion yen but said 'there are still many unknowns'.
On chips, Trump offered a big exemption: the 100 per cent tariff will not apply to companies that manufacture in the US or have committed to do so.
While Japan is the largest foreign investor in the United States at US$819 billion at the end of 2024, according to US government data, its chip industry has shied away from making big US investments.
Shares of Japan chip-making equipment maker Tokyo Electron fell 2.7 per cent and chip-testing equipment maker Advantest dropped nearly 1 per cent on Thursday. Chipmakers with big US expansion plans, however, jumped, with Taiwan's TSMC up 5 per cent and South Korea's Samsung rising 2.5 per cent.
Japan has said the US agreed not to give it a worse tariff rate than other countries on semiconductors and pharmaceuticals.
Tokyo ran a bilateral trade surplus of nearly US$70 billion last year on US-Japan trade of nearly US$230 billion. REUTERS