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Japan’s Honda has estimated a $3bn blow from US tariffs that will cut annual profits by more than half, becoming the latest carmaker to warn of fallout from the trade war.
The company estimated a hit of ¥650bn ($4.3bn) but said it believed it could offset about ¥200bn through countermeasures, such as adjusting production to minimise the tariff impact.
As a result, annual operating profit would fall 59 per cent to ¥500bn in the 12 months ending in March 2026 from ¥1.2tn in the previous year.
“The impact of tariff policies is huge,” said Toshihiro Mibe, chief executive, adding that its modelling represented a worst-case scenario. “This is the bottom. I think the tariff impact will continue to change as time goes by.”
Even as the US has toned down tariffs against China, the automotive industry is still suffering from levies in excess of 25 per cent on finished car imports, as well as further tariffs on certain components and raw materials such as steel and aluminium.
The heavy blow from tariffs and the slow pace of the shift to electric vehicles also led Honda to delay an $11bn investment in EV and battery factories in Canada. The plans were announced 13 months ago.
“In North America, the EV market growth is slowing down so as of now, we think we should postpone at least for two years,” said Mibe.
The earnings hit compares to General Motors and Ford warning of an impact to profits of up to $5bn and $1.5bn, respectively, due to levies on imports. The US manufacturers’ financial year runs to the end of the year, whereas Honda’s ends next March.
Last week, Toyota revealed US tariffs would hurt profits by $1.2bn in April and May, while on Monday, Mazda suspended its guidance for next year but estimated a monthly level of tariff impact that would essentially wipe out all profits if continuing at that rate.
To mitigate the impact of the levies, Honda’s Mibe said it had brought vehicles produced in Japan, Canada and Mexico into the US ahead of them coming into effect. Honda has also adjusted production schedules, such as its plan to move Civic hybrid production to the US from Japan.
This is a developing story.
