Corporate Interim Earnings: Companies Must Devise Ways to Overcome Trump Tariffs

Editorial

17:02 JST, November 16, 2025

The high tariff policy of U.S. President Donald Trump’s administration is casting a shadow over companies’ business performance. Companies must come up with strategies to adapt to the changing environment to overcome the heavy burden of tariffs.

Almost all the companies listed on the Tokyo Stock Exchange have released their interim results for the half-year period ending in September. The combined net profits of companies that make up the Tokyo Stock Price Index (TOPIX), excluding firms in the financial sector, declined in the interim period for the second consecutive year.

However, the combined net profits did remain high at about ¥19 trillion. The year ending in March 2026 is expected to see the first decline in profits in five years, but a significant drop will likely be avoided.

The primary factor behind the drop is the slump in the core automotive industry. The tariffs had a significant impact, with the combined effect on the seven major automakers reaching about ¥1.5 trillion. Four companies, including Toyota Motor Corp. and Honda Motor Co., saw reduced profits, while Nissan Motor Co., Mazda Motor Corp. and Mitsubishi Motors Corp. fell into the red.

The United States raised its automobile tariff rate to 27.5% in April. Fearing a decline in sales, automakers only partially passed along the tariff costs to export prices, likely compressing their profits.

The automotive industry has a broad base. The Japanese government must take all possible measures to support cash flow management for relevant companies, including small and midsize firms.

In addition, the U.S. high tariff policy is disrupting the supply chains that Japanese companies have established across various countries. In this regard as well, their ability to adapt to change is being tested more than ever before.

Japan plans to invest $550 billion (about ¥85 trillion) in the United States under an agreement with Washington. Toyota has announced a plan to invest up to $10 billion in the United States over five years to strengthen production of electric vehicles and other models in the country. Investments by other companies are also expected to accelerate.

Prime Minister Sanae Takaichi’s administration has designated investments in industries deemed critical from an economic security perspective as investments toward crisis management amid confrontation between the United States and China. It plans to actively support these sectors through tax reductions and other measures.

Japanese companies must also consider expanding factory operations into Asia, Africa and other regions to diversify investment risks.

Meanwhile, expectations for growth in the fields of generative artificial intelligence and semiconductors have pushed the Nikkei Stock Average up to the 50,000 level, with conspicuous earnings growth also seen among related companies. Mitsubishi Electric Corp. has seen sales increase for its data center equipment, with net profit rising by 60% compared to the previous year.

Many companies maintain solid performance even in the face of headwinds.

However, wage increases have failed to keep pace with rising prices, and the trend of declining real wages has persisted for an extended period. It is problematic that benefits are not being passed on to the public. Companies must reaffirm their responsibility to drive the economy through proactive investment and wage increases.

(From The Yomiuri Shimbun, Nov. 16, 2025)