Honda reports sharp profit drop amid Trump tariffs

Honda Motor Co. reported a sharp decline in profits, as US President Donald Trump’s tariffs weighed on the Japanese automaker’s earnings and a slowdown in electric vehicle demand dampened performance.

The Tokyo-based company said profit for the nine months ended in December fell 42% from a year earlier to ¥465.4 billion ($3 billion), down from ¥805.2 billion. This marked the second consecutive year that Honda’s profit declined over the same period.

Sales for the three quarters slipped 2.2% to ¥15.98 trillion ($102.6 billion). Despite the weaker results, Honda maintained its full fiscal-year profit forecast at ¥300 billion ($1.9 billion).

Honda attributed part of the downturn to slowing demand for electric vehicles in the US market, while noting that relatively strong performance in its motorcycle division helped offset some of the pressure.

Reflecting the shifting market environment, the company lowered its projection for the share of global EV sales in 2030 to 20%, down from its previous target of 30%. Honda also said it had canceled the development of some EV models, citing changes in the electric vehicle market.

The policy environment in the United States has added to the challenges. The Trump administration, which has favored the oil and gas industry, has rolled back several programs supporting the adoption of electric vehicles, dismantling initiatives introduced under the Biden administration that promoted cleaner cars and trucks.

Last year, Trump reduced tariffs on imported automobiles and auto parts to 15%, down from an initially announced 25%. In return, Japan pledged to invest $550 billion in US projects. Analysts note that tariffs have been a major blow to Japan’s export-dependent economy, particularly its auto sector.

The pressure is being felt across the industry. Last week, Toyota Motor Corp., Japan’s largest automaker, also reported a decline in recent profit and announced that Chief Financial Officer Kenta Kon will take over as chief executive and president.

Meanwhile, Japan’s political landscape shifted over the weekend, when Prime Minister Sanae Takaichi—who took office in October as the country’s first female leader—secured a landslide parliamentary election victory for the ruling party. The result is expected to ease the path for her Liberal Democratic Party to advance its agenda, including measures to spur economic growth through increased government spending, particularly in technology and defense.

Investors responded positively to the broader market mood. Honda shares rose 2.1% on February 10 trading, while the Nikkei 225 benchmark index gained 2.3%, hitting a record high for the second consecutive session, partly buoyed by optimism surrounding Takaichi’s popularity.

By Vafa Guliyeva