Tariff threats worry Japanese automakers' profitability

Toyota and other Japanese automakers were initially hopeful about a second Trump administration. They believed that Trump would help them by rolling back policies aimed at promoting electric vehicles over traditional cars. Before the election, Toyota even donated $1 million to Trump's inauguration. However, the optimism has faded. In February, the Trump administration announced a 25% tariff on goods from Canada and Mexico, where many Japanese cars are assembled. On April 2, the U.S. is expected to reveal additional tariffs that may also impact Japan, raising concerns for the Japanese automobile industry. Japan relies heavily on car exports, with the U.S. being a primary market for companies like Toyota, Honda, and Nissan. Analysts warn that Trump's tariffs could cut as much as 0.2% from Japan's GDP this year, which could significantly affect the country's already struggling economy. In response to the looming tariffs, Japanese automakers are trying to increase shipments to the U.S. and are preparing to boost production at their plants in the country. Many are worried that higher tariffs will hurt their profits. In Maine, one dealer has already reported the worst February profits since 2009. Toyota and its peers have invested billions in the U.S. over the years and are working to convince lawmakers that tariffs could raise vehicle prices and hurt American consumers. So far, efforts to secure exemptions from tariffs have not succeeded. With no new projects to present, Japanese automakers face uncertain prospects as they navigate a volatile trade environment.