Honda projects a 70% annual profit nose-dive this year because of Trump tariffs

Honda’s profit for the fiscal year through March slipped 24.5% from the previous year, as its vehicle sales in China dropped, and the Japanese automaker warned Tuesday that President Donald Trump’s tariffs will worsen its earnings.

Tokyo-based Honda Motor Co., which dropped talks to integrate its business with Japanese rival Nissan Motor Corp. earlier this year, said its annual profit totaled 835.8 billion yen ($5.6 billion), down from 1.1 trillion yen in the previous fiscal year.

Annual sales edged up 6.2% to nearly 21.69 trillion yen ($147 billion).

Research and development costs hurt, despite Honda’s record global motorcycle sales for the fiscal year, which topped 21 million motorcycles.

Hybrid vehicle sales also did well, especially in the U.S., and Honda's profitability per vehicle was also improving, according to the maker of the Accord sedan and CR-V sports-utility vehicle.

Executive Vice President Noriya Kaihara acknowledged that Trump’s tariffs were likely to hurt, erasing 650 billion yen ($4.4 billion) from its operating profit for the fiscal year through March 2026. That's mainly because of U.S. tariffs on vehicles from Canada and Mexico. Honda’s vehicle shipments from Japan to the U.S. are negligible.

Officials stressed major uncertainties remain, but said they felt it was important to give a realistic projection, no matter how pessimistic it might be.

Chief Executive Toshihiro Mibe said Honda will do its best to minimize the impact from tariffs. In the long term, Honda will transfer auto production to U.S. plants and rethink its investment plans. All decisions will be made “very carefully,” Mibe told reporters.

He also said Honda was sticking to its plans to produce more electric vehicles.

Various automakers have said they are baffled by Trump's opposition to EVs and his tariffs, and some companies are trimming back their ambitious electrification plans.

Honda is projecting a 70% nose-dive in profit for the fiscal year through March 2026, at 250 billion yen ($1.7 billion), on 20.3 trillion yen ($137 billion) in sales, down 6%.

Honda and Nissan announced in December they were going to hold talks to set up a joint holding company. Mitsubishi Motors Corp., another Japanese automaker, had said it was considering joining that group. But the plans quickly unraveled, with Nissan saying it wanted out because it would be at a disadvantage.

Nissan, which has slipped into red ink lately, reports financial results later Tuesday.

This story was originally featured on Fortune.com