Honda Forecasts 70% Profit Decline Due to Trump Tariffs

Honda, a leading Japanese automaker, has forecasted a substantial decrease in its annual profit for the fiscal year concluding in March 2026. The company expects a 70% reduction in profit, totaling 250 billion yen ($1.7 billion), with projected sales of 20.3 trillion yen ($137 billion). This sharp decline is mainly due to the tariffs implemented by the Trump administration. Executive Vice President Noriya Kaihara confirmed that these tariffs are anticipated to reduce Honda's operating profit by 650 billion yen ($4.4 billion). The tariffs, especially those on vehicles from Canada and Mexico, are identified as the primary cause of this financial downturn. Despite this, Honda's vehicle exports from Japan to the U.S. are minimal, suggesting that the main impact is felt through the broader supply chain and market dynamics.

Honda's financial performance for the fiscal year ending in March 2025 showed a 24.5% decrease in profit compared to the previous year, totaling 835.8 billion yen ($5.6 billion). This decline was primarily due to reduced vehicle sales in China and increased research and development expenses. However, the company reported record global motorcycle sales, surpassing 21 million units, and robust hybrid vehicle sales, particularly in the U.S. These positive developments have contributed to improving Honda's profitability per vehicle.

In response to the tariff challenges, Honda's Chief Executive Toshihiro Mibe emphasized the company's dedication to mitigating the impact of these measures. Mibe stated that Honda will carefully consider relocating auto production to U.S. plants and reassessing its investment strategies. The company remains committed to its long-term plan to produce more electric vehicles, despite the uncertainties posed by the tariffs. Various automakers have expressed confusion over the Trump administration's stance on electric vehicles and the associated tariffs, leading some to scale back their ambitious electrification plans.

Honda's projection of a 70% profit decline highlights the significant financial pressure imposed by the tariffs. The company's decision to provide a realistic, albeit pessimistic, outlook reflects its commitment to transparency and preparedness in the face of economic challenges. As Honda navigates these difficulties, it continues to focus on innovation and strategic adjustments to maintain its competitive edge in the global automotive market.