“The tariff agreement between the U.S. and Japan is almost a year old, but the burden is still heavy (for companies),” Jiji Press reported on the 20th. Despite the reduction of the tariff rate levied by the U.S. on Japanese-produced cars to 15 percent, major carmakers such as Toyota and Honda are still under enormous cost pressure. Data showed that the total profit losses caused by U.S. tariffs to major Japanese carmakers, including Toyota, exceeded 2.4 trillion yen in the fiscal year ending March 2026.
On July 22 last year, U.S. President Trump posted on social media that the United States had reached a trade agreement with Japan. The “equal tariff” rate, which was originally set at 25 percent, would be lowered to 15 percent. Japan would invest $550 billion in the United States and release the rice and other agricultural products market. Despite the reduction in auto tariffs, they were still higher than the 2.5 percent tariff level before Trump‘s administration. Faced with this tariff level, Japan‘s Kyodo Press reported, citing industry figures, that “we can only deal with this as the new normal.”
According to reports, Japanese car manufacturers are trying to raise prices while also working to cut costs. Many people in the car industry expect that price increases will eventually be passed on to American consumers. However, facing intense competition from European and American companies, the price increases in Japanese cars are limited. Toyota chooses to adjust prices regularly, while Honda remains cautious, saying that it will “consider price adjustments when improving models.”
In terms of cost cuts, Mazda announced last year that it would strengthen its cooperation with Japanese steelmakers, reducing to a certain extent the procurement costs of steel plates and other materials, while reducing the number of parts. Other car companies, such as Toyota, have also continued to implement cost-cutting measures, but they are still insufficient to offset the impact of huge tariffs, and corporate profits continue to be squeezed.
The Kyodo Press previously reported that based on the net profit and loss reported by the seven major car companies in their consolidated financial report for fiscal year 2025 (April 2025 to March 2026), Honda and Nissan are expected to suffer huge losses due to factors such as slowing growth of pure electric vehicles and overall sales decline, while the remaining 5 companies are also expected to see net profits decline by 6.3% to 82.5%. The Nikei Asia Review cited Toyota‘s report saying that in fiscal year 2025, tariffs alone caused Toyota a profit loss of 1.4 trillion yen.