As CES 2026 opens with bold visions of software-defined vehicles and artificial intelligence reshaping the future of mobility, Toyota, the world's largest automaker, is striking a notably cautious tone about the year ahead. Despite reporting an 8% increase in US sales in 2025, to 2.52 million vehicles, Toyota is signaling that 2026 will mark a turning point—one defined less by growth than by defense.
The change in outlook reflects the mounting impact of US tariff policy, which has transformed what was once a powerful profit engine into a growing financial burden.
Shifting from market leader to market follower
According to foreign media reports, Toyota has acknowledged that it will no longer seek to set pricing or volume benchmarks in the US market in 2026. Instead, the company plans to adopt a more reactive, "market follower" posture, citing steep US tariffs of 15% to 25% on imported vehicles.
Roughly 23% of Toyota's US sales are supplied by vehicles imported from Japan, which face a 15% tariff. Another 28% are produced in Mexico and Canada. Supply chains that once underpinned Toyota's growth have now become direct targets of trade penalties, sharply narrowing the company's margin for maneuver.
Pricing pressures and capacity constraints
With profit margins unable to absorb tariff costs of that magnitude, Toyota expects to raise vehicle prices two to three times in 2026. While the company has pledged to invest US$10 billion in the United States over the next five years to expand localized production, its North American factories are already operating near capacity. Output growth is estimated at just 1% to 2%, leaving little room for short-term relief.
Unpredictability threatens expansion plans
Suppliers say the industry's greatest challenge is not tariffs themselves, but their unpredictability. The planned renegotiation of the US-Mexico-Canada Agreement in 2026 has introduced a new layer of uncertainty, prompting automakers to pull back on expansion plans, delay investments, and discontinue low-margin models. The result, suppliers warn, is likely to be fewer choices for consumers.
Toyota has already begun implementing what executives describe as a "precision profitability" strategy, scaling back production or discontinuing marginal models that fail to meet return targets to optimize limited domestic resources.
Rare promotional campaigns may emerge
Historically, Toyota has served as a pricing anchor in the US market, relying less on discounts than many rivals. In 2026, however, the combined pressure of tariff pass-through and weakening consumer demand may force the company to adopt more flexible pricing—and potentially engage in rare promotional campaigns to defend market share.
Adding to the challenge, 2026 coincides with a full redesign cycle for the RAV4, Toyota's global best-selling model. The new generation will emphasize hybrid and plug-in hybrid variants, but amid heightened uncertainty across supply chains and trade policy, even this flagship vehicle faces elevated risks of disruption.
Taken together, Toyota's posture at the dawn of CES 2026 offers a sober counterpoint to the industry's technological optimism: a reminder that even as innovation accelerates, geopolitics and trade policy remain powerful forces shaping the future of the global auto business.
Article edited by Jerry Chen
