Honda Slashes Profit Forecast, Halts Canada EV Plan Amid Trump Tariff Pressure

Honda Motor Co. (NYSE:HMC) has projected a 59% drop in operating profit for the fiscal year ending March 2026, citing U.S. tariffs under President Donald Trump and weakened electric vehicle (EV) demand. The Japanese automaker now expects an operating income of 500 billion yen ($3.38 billion), down from 1.21 trillion yen the previous year.

The revised forecast reflects mounting challenges for global carmakers as they contend with escalating tariffs and competition from Chinese EV manufacturers. Honda estimates a 650 billion yen impact from tariffs worldwide in fiscal 2026, with about 300 billion yen tied to U.S. import duties on 550,000 vehicles. The company aims to recover roughly 200 billion yen through mitigation strategies.

Adding to the strategic setback, Honda has delayed its ambitious EV supply chain project in Ontario, Canada, for at least two years. The initiative, announced in April 2024, was put on hold due to softening global EV demand, the company said.

CEO Toshihiro Mibe addressed the uncertainty in a press conference, emphasizing the need for “strategic partnerships” to weather current market pressures. While talks of a merger with Nissan (OTC:NSANY) ended earlier this year, the companies continue to collaborate on automotive technologies.

This development highlights the broader instability facing traditional automakers amid geopolitical headwinds and the rapid rise of Chinese EV rivals. Honda’s strategic pause and profit warning are key signals of how legacy car brands are recalibrating in response to shifting global trade and energy landscapes.