Toyota Faces 1.7 Trillion Yen Trade Deficit and Eroding China EV Market Share
Toyota Motor reported Japan’s trade deficit reached 1.7 trillion yen in the fiscal year ending March, while auto exports to the U.S. plunged 16% following higher U.S. tariffs. In China, Toyota’s market share continues to erode as domestic EV makers like BYD and Xpeng undercut on price and AI-driven tech.
1. Japan Trade Deficit and Auto Exports
Japan recorded a 1.7 trillion yen trade deficit in the fiscal year ending March, marking its fifth consecutive annual shortfall. While overall exports rose 4%, auto shipments to the U.S. declined 16%, reflecting the impact of higher import duties on Japanese vehicles.
2. Impact of U.S. Tariffs on Toyota
The 25% U.S. tariffs on imported vehicles, imposed in March 2025, have prompted Toyota to shift more production into local markets where its cars are sold. By relocating assembly plants closer to key regions, Toyota aims to mitigate duty costs and stabilize its North American and European supply chains.
3. China Market Share Erosion vs Domestic EVs
At the Beijing auto show, Chinese brands such as BYD, Xpeng and Xiaomi highlighted AI-driven EVs priced below comparable Toyota models. This technology and cost advantage has accelerated domestic competition, causing Toyota’s share in China—the world’s largest auto market—to shrink steadily.