Japanese carmaker Honda has reported a 50% drop in quarterly profits, attributing the decline to the impact of US tariffs under President Donald Trump and losses on electric vehicle (EV) sales. Operating profits fell to 244bn yen (£1.2bn) in the three months to June, with a 124bn yen hit from tariffs and 113bn yen in losses on EV sales in the US.
The car industry has been heavily affected by Trump’s tariffs, which included a 25% levy on all vehicle imports from March, raising total tariffs on Japanese imports to 27.5%. However, last month a trade deal between the US and Japan limited tariffs to 15%, reducing some of the financial strain. Honda said the full-year tariff impact would be 450bn yen, lower than its earlier estimate of 650bn yen.
Honda, Japan’s second-largest carmaker, produces vehicles globally and relies on factories in Mexico and Canada for US-market cars. It also has five US assembly plants. The company managed to offset some tariff costs by raising prices in the US, a move that introduces inflationary pressure, though Trump has stated he is unconcerned about price rises for consumers.
Despite the tariff challenges, Honda noted that sales in North America remained strong. However, its EV division suffered losses, leading the company to write off development costs as the industry shifts focus towards more profitable hybrid vehicles. The results highlight ongoing difficulties for carmakers navigating trade policies and the transition to electric mobility.
