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By Daniel Leussink
TOKYO (Reuters) -Japan's Honda Motor forecast a 59% profit decrease in the current financial year and said it would put on hold a plan to build an EV supply chain in Canada, amid the uncertainty stemming from U.S. President Donald Trump's tariffs.
Japan's second-biggest automaker expects operating income to total 500 billion yen ($3.38 billion) in the year to March 31, 2026, versus 1.21 trillion yen in the year that just ended.
Honda's forecast is the latest signal of the difficulty car makers are having navigating Trump's tariffs on foreign-made automobiles at the same time the industry is being hit by the rise of Chinese EV producers.
Honda also said it would put on hold for "approximately two years" a plan announced in April 2024 to build an EV supply chain in Ontario, Canada. That decision was taken due to the current slowdown in EV demand, it said.
Talks between Honda and Nissan to merge broke off earlier this year, although the two still have an agreement to cooperate on technology. Such tie-ups are seen as increasingly important for automakers to counter the threat from fast-moving EV companies, particularly in China.
"Although the automotive industry is in a very difficult situation, we will definitely look for new directions of growth through strategic partnerships," Toshihiro Mibe, Honda's chief executive, told a news conference. He said there had been no development in the possible tie-up with Nissan since talks were scrapped in February.
Honda expects a 650 billion yen hit to its fiscal 2026 operating profit from tariffs in various countries, of which 300 billion yen was due to their impact on imports of around 550,000 finished cars. The company projected it would be able to offset about 200 billion yen of the tariffs with efforts to mitigate its impact, it said in presentation materials.
($1 = 147.8900 yen)
(Reporting by Daniel Leussink; Editing by Christian Schmollinger and David Dolan)