Japanese automakers are reportedly losing about 3 billion yen ($20.3 million) in total profits each day the U.S. postpones reducing auto tariffs, according to data from Nikkei Asia. The full-year impact of these tariffs is projected to reach 2.7 trillion yen ($18.3 billion), leading to a 36% decline in combined operating profits for six major manufacturers, excluding Nissan, which has yet to provide a forecast.
In April, the U.S. increased tariffs on Japanese vehicles from 2.5% to 27.5%, but last month it agreed to lower the rate to 15%. Goldman Sachs Japan estimates this reduction could mitigate the damage by 1.6 trillion yen, although each month of delay adds approximately 100 billion yen to the financial burden on automakers, as reported by Nikkei.
Mazda, which derives about one-third of its sales from the U.S., anticipates an 82% decline in net profit to 20 billion yen this fiscal year, assuming the lower tariff rate takes effect on August 1. With tariffs expected to cost 233.3 billion yen, the company aims to offset these losses with 80 billion yen in cost reductions, but further delays could push it into negative territory. Subaru, which sells 70% of its products in the U.S., forecasts a hit of 210 billion yen and a 51% decrease in operating profit to 200 billion yen.
Nikkei Asia reports that Toyota is bracing for the largest loss—1.4 trillion yen—due to significant U.S. sales and supplier costs. This forecast also assumes an August 1 start date for the reduced tariffs. In July, Toyota raised prices in the U.S. by an average of $270, attributing this to “the improved performance of the vehicles rather than the tariffs.” Takanori Azuma, head of Toyota’s accounting group, indicated there could be further price increases “if the timing is right for customers.” Toyota now expects pricing adjustments to boost earnings by 370 billion yen, an increase from the previous estimate of 250 billion, but still far below the anticipated tariff impact.
Price increases carry inherent risks. A surge in pre-hike purchases may lead to slower sales later, and higher prices could hurt competitiveness. “We continue to approach [price hikes] with caution,” said Honda CFO Eiji Fujimura. Mitsubishi Motors, which raised prices in June, still reported a 3 billion yen operating loss in North America last quarter, with a 14.4 billion yen impact from tariffs.
If price adjustments cannot fully offset the duties, automakers will need to implement cost cuts. Toyota expects savings, increased sales volume, and a better mix of models to contribute an additional 899.5 billion yen to operating profit.
Japan’s lead trade negotiator, Ryosei Akazawa, expressed optimism that the U.S. will eventually lower the tariff rate as Washington revises its “reciprocal” tariff policy. When asked about the timeline, he noted that both sides “tacitly understand that it would be best to act quickly.”
