Toyota, the world’s biggest carmaker by sales, has cut its profit outlook for the year after estimating major losses from U.S. tariffs. The company now expects operating profit of USD 21.5 billion (¥3.2 trillion), down 16% from its earlier forecast. Tariffs are expected to shave nearly USD 9.5 billion from Toyota’s annual earnings, one of the heaviest hits the company has faced in recent years.

Toyota is particularly vulnerable because of its large production and export footprint in the U.S. market. To avoid burdening customers with higher prices, the automaker has been absorbing some of the tariff costs itself, which has squeezed profit margins. At the same time, Toyota is exploring ways to adjust its supply chain, including producing more locally, to reduce future exposure to tariffs.

Despite these setbacks, Toyota is staying focused on its long-term strategy. The company is continuing to ramp up production of hybrid and electric vehicles in response to stricter environmental rules around the world. It is also investing heavily in new battery technologies, which it hopes will give it an edge in the fast-growing EV market. Expansion plans are underway in Europe, the U.S., and Japan to increase EV capacity.

Analysts point out that Toyota’s conservative financial management gives it more resilience than many rivals. However, the tariff hit is a reminder that even the strongest automakers are exposed to geopolitical risks. Unlike normal downturns caused by weaker demand, tariff-related losses are structural and harder to control.