Toyota Motor Corp. is projected to incur significant losses due to US tariffs, estimating a $1.2 billion profit drop in just two months. The company has increased local production in the US to over half of its sales but still relies heavily on imports for key vehicle parts, making it vulnerable to tariff impacts. The ongoing trade negotiations between the US and Japan add uncertainty to Toyota's financial outlook, with analysts expecting operating income for the fiscal year to fall short of previous estimates.

The tariffs have forced Toyota to maintain sticker prices and production volumes at its US factories, limiting its ability to adapt to the changing trade environment. Competitors like General Motors and Ford are also feeling the strain, with GM slashing its profit guidance by up to $5 billion. The situation highlights the broader challenges facing the automotive industry amid rising tariffs and trade tensions, particularly for Japanese automakers who are heavily reliant on the US market.