Japan firms expect a $28 billion hit from U.S. tariffs

Japan’s largest companies said U.S. tariffs could erode annual profits by tens of billions of dollars, with the probability of a bigger impact in the event of a recession.

According to Financial Times calculations based on company guidance during the current full-year earnings season, firms like Toyota, Sony, and Mizuho could face a loss of 4 trillion yen ($27.6 billion).

The nearly $28B total was calculated by adding up tariff impact figures provided by Japan’s top 100 largest groups by market capitalization, car companies, and others that cited a large impact in their earnings presentations or calls. Most of the estimates given by Japanese groups assume no measures to offset the charges, such as a product price rise.

Corporate Japan warns of huge blow from U.S. tariffs

*TOYOTA: -180B YEN IMPACT ON PROFIT IN APRIL-MAY FROM US TARIFFS

Yeah good luck to you if you work at a Toyota factory in the United States.

I tried my best to warn you.

— Spencer Hakimian (@SpencerHakimian) May 8, 2025

Japan’s economy could be steered further off course following figures released on Friday that showed Japanese GDP turned negative in the January-to-March period from the previous quarter, even before the U.S tariffs had begun to show in the export numbers.

Japan’s automotive industry, its biggest export sector, was hit the most by the U.S. trade levies. The country exported 1.5 million vehicles to the U.S. in 2023, worth more than $40 billion, and car manufacturers also ship many vehicles and parts into the U.S. from Mexico and Canada, which have been hit by tariffs as well.

Chief executive at Honda, Toshihiro Mibe, said that the impact of tariff policies is huge, with the car company predicting 650B yen ($4.5 billion) of extra costs and has slashed its investment plans to 2030 by 3 trillion yen ($20B) to 7 trillion yen. Toyota had the hardest blow, estimating an impact of $1.2 billion in April and May.

Tadashi Imai, president at Nippon Steel, which declined to estimate the tariff impact, acknowledged that the levies were expected to have a tremendous impact on the domestic and overseas steel industries, including indirect effects. Other Japanese firms said they could take countermeasures to offset the blow by raising prices or shifting more production to the U.S.

U.S. expects trade negotiations with Japan 

The U.S. issued 25% tariffs on imports from Japanese car companies, as well as steel and aluminum producers, while other sectors have 24% levies on their goods as part of President Donald Trump’s reciprocal tariffs.

Japan is yet to secure a deal with the U.S., with chief negotiator Ryosei Akazawa planning a third round of talks with U.S. Treasury Secretary Scott Bessent by the end of the month. Bessent mentioned on Sunday that tariff rates will go back to reciprocal levels if countries do not make trade deals with the U.S. during the 90-day pause. 

“President Trump has put them on notice that if you do not negotiate in good faith, you will ratchet back up to your April 2 level.”

Scott Bessent, U.S. Treasury Secretary.

The President also mentioned on Friday that the U.S. will set tariff rates for its trading partners within the next few weeks. Trump acknowledged that his administration cannot negotiate trade deals with all countries at once due to limited capacity.

According to government data, Japan’s export growth slowed for a second straight month as the country reels under Trump’s tariffs. Exports to the U.S. also fell for the first time since December last year, plummeting 1.8% from a year ago. Japan’s exports to the U.S. inched up 3.1% in March.

According to official figures, the country’s trade surplus with the U.S. narrowed to 780.6 billion yen ($5.4 billion) in April, compared to 846.9 billion yen in March. Customs data also showed that Japan’s exports of transport equipment, including motor vehicles and parts, to the U.S. fell 4.1% by value from a year earlier. 

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