Toyota Motor forecast a 21% profit decline for the current financial year on Thursday, as the strain from U.S. President Donald Trump's tariffs and an appreciating yen take some of the shine off strong hybrid demand.

The Japanese carmaker projected lower annual profit after reporting a drop in fourth-quarter earnings, with U.S. tariffs and higher material costs expected to cut into its bottom line.

Toyota has warned operating profits will fall 21 per cent this fiscal year due to the fallout from Donald Trump’s trade war, increasing the pressure on Japan to reach a deal on tariffs with the US.