Tariffs Hits Hard At Toyota

Investors have been following trade (dis)agreements between the US and major trading partners for the past week. They were particularly concerned about the 50% tariffs that India would have to pay on exports to the US.

The case of Toyota illustrates the significant impact of Trump’s tariffs on companies’ business operations. In the second quarter, net profit fell by almost 40% and operating profit by 11% (to $7.9 billion), despite higher sales (six percent year-over-year growth and 17% growth in the electric vehicle segment).

In the second quarter alone, higher tariffs (Japan initially had 30% tariffs and is now negotiating 15%) are expected to wipe out $2.9 billion in revenue, the biggest (tariff-related) damage auto companies have suffered to date. The full-year cost of higher tariffs is expected to reach $9.5 billion.

Meanwhile, US Commerce Secretary Howard Lutnick boasted that the US earned $30 billion more in July because of the new tariffs, and that figure is expected to rise to $50 billion this month.

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