Japanese auto giant Toyota on Thursday cut its annual net profit forecast to 2.66 trillion yen ($18.06 billion) owing to the impact of US tariffs.

“Due to the impact of US tariffs and other factors, actual results showed decreased operating income, and the forecast has been revised downward,” the company said in a statement.

Its shares fell 0.6 per cent in Tokyo afternoon trade.

The Trump administration in April imposed a 25 per cent levy on Japanese cars imported into the United States, dealing a hefty blow to Japan and its crucial auto sector.

Although Tokyo and Washington announced a trade deal in July, lowering that rate to 15 percent and providing a degree of relief for the industry, it’s not yet clear when it will take effect.

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There is also confusion over whether the car tariff — as well as other “reciprocal” levies — will be capped at 15 per cent, or if these would come on top of those in place before Trump’s trade blitz.

The auto industry had a pre-existing 2.5 per cent tariff, meaning the levy currently stands at 27.5 per cent.

Revenues in Toyota’s first quarter from April to June were up 3.5 per cent, but net income dropped by 36 per cent.

AFP