Toyota Motor Corp (NYSE:TM) says that the automaker has recorded an impact of over $4.3 billion due to the war in the Middle East as tensions between Washington and Tehran continue to surge.

22% Drop In Earnings

During the company’s first-quarter 2026 earnings call on Friday, the automaker shared that it expected its operating profit to drop over 3.8 trillion yen (approximately $24 billion) for the 2025-26 fiscal year. The decline in profit represents a nearly 22% YoY drop from the earlier figure of 4.8 trillion yen (nearly $30 billion), largely due to U.S. tariffs.

However, the automaker also said in its 2026-27 forecast that it expects an operating income of 3 trillion yen (approximately $19 billion) due to the situation in the Middle East. “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.

The automaker expects total sales of hybrid vehicles to exceed 5 million units this year, “primarily driven by HEVs that were well-received in regions such as North America and China,” Toyota said.

Tariffs Ruled Illegal

The news comes as a panel of judges at the U.S. Court of International Trade passed a ruling, deeming President Donald Trump’s 10% global tariffs imposed under Section 122 of the Trade Act of 1974 illegal and “unauthorized by law.”

The ruling follows an earlier decision by the Supreme Court that had blocked Trump’s broader tariff framework under the International Emergency Economic Powers Act (IEEPA).

Automakers like Ford Motor Co. (NYSE:F), as well as General Motors Co. (NYSE:GM), Stellantis NV (NYSE:STLA), among other companies, have factored in the IEEPA tariff refunds into their earnings reports. Notably, the President had earlier acknowledged that companies not applying for tariff refunds could stand to benefit.

Iran War

Amid the war, the U.S. and Iran exchanged fire near the Strait of Hormuz. Trump downplayed the exchange, calling it a "love tap." Meanwhile, the U.S. Central Command earlier said that Iran had deployed missiles, drones, and small boats to target U.S. Navy destroyers.

According to Benzinga Edge Rankings, Toyota scores well on the Quality and Value metrics, but fails to provide a favorable price trend in the Long term.

TM Price Action: Toyota Motor shares were down 4.03% to $187.19 during premarket trading on Friday.

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