Toyota warns vehicles costs could rise after tariffs

New Toyota Camry images

Toyota Motor on Friday stated higher U.S. auto tariffs would increase the cost of vehicles produced regionally along with those imported to the United States from Japan, which would have a huge impact on its bottom line.

Like its worldwide competitors, Toyota is bracing for the possibility of an increase in U.S. auto import tariffs, which could cloud its outlook as it would increase the cost of selling vehicles in the world’s second-biggest auto market. Such uncertainty took the shine off strong quarterly results announced on Friday.

So far, Japan’s biggest automakers and components providers stated they have seen limited direct impact from U.S. tariffs on steel and aluminum implemented in June, however they acknowledge they could take a major hit if Washington delivers on proposals to increase tariffs on autos and auto parts to 25 percent.

“If we see a rise, it would raise the cost of locally produced vehicles by around $1,800 each, and increase costs for (models imported from Japan) by $6,000,” Toyota senior managing director Masayoshi Shirayanagi informed reporters at a results briefing, referring to U.S.-made Camry sedans, one of the Toyota’s most iconic models.

“This would be a big impact.”

The United States is a significant market for Japan’s automakers, where Toyota, Honda Motor and Nissan Motor regionally produce around half or more of the vehicles they sell in the nation. The rest are imported from Japan, Canada, Mexico and other countries.

Based on the approximately 709,000 vehicles Toyota exported to the United States from Japan in last year, the automaker could take a yearly tariff-related hit of $4.25 billion on those automobiles alone.

Higher tariffs would give a major blow to all international automakers as most, consisting U.S. ones, rely on imports to source the automobiles and parts contained in them which are sold in the United States.

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