War in the Middle East is taking a toll on one of the world's biggest automakers. Toyota Motor Corp. (TM) said Friday that the conflict between the U.S. and Iran has already cost it more than $4.3 billion, and the company is bracing for a sharp drop in profits.
During its first-quarter 2026 earnings call, Toyota forecast operating profit of about 3.8 trillion yen (roughly $24 billion) for the fiscal year ending March 2026. That's a nearly 22% decline from the previous year's 4.8 trillion yen (about $30 billion), with U.S. tariffs taking a big bite. But the Middle East situation is the real wild card: the company's 2026-27 outlook calls for operating income of just 3 trillion yen (about $19 billion), directly blaming the conflict. "We do not believe we can fully offset negative JPY 670 billion (approximately $4.3 billion) Middle East impact resulting in the operating income forecast of JPY 3 trillion," Toyota said.
It's not all bad news. Toyota expects hybrid vehicle sales to top 5 million units this year, "primarily driven by HEVs that were well-received in regions such as North America and China." That's a bright spot as the company navigates geopolitical turmoil.
The tariff picture just got more complicated. A panel of judges at the U.S. Court of International Trade ruled that President Donald Trump's 10% global tariffs, imposed under Section 122 of the Trade Act of 1974, are illegal and "unauthorized by law." This follows a Supreme Court decision that blocked Trump's broader tariff framework under the International Emergency Economic Powers Act (IEEPA). Automakers like Ford Motor Co. (F), General Motors Co. (GM), and Stellantis NV (STLA) have already factored IEEPA tariff refunds into their earnings. Trump had previously noted that companies not applying for refunds could still benefit.
The Iran war backdrop is tense. The U.S. and Iran exchanged fire near the Strait of Hormuz, though Trump downplayed the skirmish as a "love tap." The U.S. Central Command said Iran deployed missiles, drones, and small boats targeting U.S. Navy destroyers.
As for Toyota's stock, it was down 4.03% to $187.19 in premarket trading Friday. According to market data, Toyota scores well on quality and value metrics but has a weak long-term price trend.
