Why Toyota Motor Stock Is Falling Today

The tariff wars hit the automotive industry, and investors are worried Toyota Motor (NYSE: TM) will be among the casualties.

Shares of Toyota traded down 4% at noon ET Thursday as investors tried to work through the ramifications of the latest tariff announcements.

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New costs, new uncertainties

Toyota is one of the great success stories of the international auto industry, but the company appears to be in the crosshairs of a new U.S. policy to impose a 25% tariff on imported automobiles and some parts.

In 2024, automobiles accounted for 28% of all Japanese exports to the U.S., and Toyota models including the Prius and 4Runner were part of that total. Toyota also manufactures in Canada and Mexico for the U.S. market.

Although Toyota does have a sizable manufacturing footprint in the U.S., the company would be unable to quickly expand domestic production even if it wanted to. At least in the near term the tariffs are likely to result in higher vehicle prices, which is likely to crimp sales.

Is Toyota a buy?

Toyota is hardly alone here, as rivals including General Motors and Ford Motor Company as well as other foreign-based companies also have international footprints. And Toyota has a well-earned reputation as an industry leader when it comes to efficiency, potentially giving it a long-term advantage in a fluctuating cost environment.

For now, the tariffs and rhetoric surrounding trade wars is likely to cause volatility. But for those who can stomach the uncertainty and focus on the long term, any extended sell-off in Toyota shares could be an attractive opportunity to buy into one of the better-managed companies in its industry.

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.