Toyota Motor Corp. said U.S. import duties cost the company about ¥450 billion ($3 billion) in the quarter ended June, underscoring the financial strain Washington’s tariffs are putting on Japan’s auto industry. The country’s publicly traded companies collectively reported an 11.7% decline in net profit for the April-to-June period from a year earlier, with automakers accounting for a large share of the shortfall, according to industry data. Despite the hit to earnings, major Japanese carmakers are choosing to maintain—or in some cases expand—domestic assembly, betting that keeping plants and supply chains at home will preserve jobs and technological expertise. The stance marks a strategic pivot away from earlier plans to shift more production to North America, even as President Donald Trump’s levies on Japan-built vehicles remain in place. Executives say the near-term profitability loss is preferable to the long-term risks of hollowing out their domestic manufacturing base. Analysts expect companies to accelerate cost-cutting and seek operational efficiencies in Japan while gradually increasing U.S. capacity to mitigate tariff exposure.