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Honda, Nissan expect billions in losses due to tariffs

Craig Nigrelli (Reporter), Shea Taylor (Producer)
Image credit: Kazuhiro Nogi/AFP via Getty Images Artur Widak/NurPhoto via Getty Images
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Summary

Impact of tariffs

President Donald Trump's 25% tariff on foreign-made automobiles has led to financial losses for major Japanese automakers. According to The Wall Street Journal, Honda anticipates a $4.4 billion drop in profits for the fiscal year, while Nissan expects the tariffs will cost them at least $3 billion.

What automakers are doing

Honda CEO Toshihiro Mibe stated that Honda is taking measures to limit the tariff impact, including increasing inventory in the U.S. in the first quarter of the year. The company is also shifting production of its Civic hybrid model to Indiana from Mexico starting in 2028.

Effects on employment

Nissan said it expects the tariffs to affect 300,000 vehicles produced in Mexico and 120,000 produced in Japan. Nissan previously announced a plan to eliminate 9,000 jobs and has now increased that figure to 20,000 in response to declining sales.

Full story

President Donald Trump’s 25% tariffs on foreign-made autos, which began in April, are hitting two major Japanese automakers hard. Honda Motor Co. forecast a $4.4 billion drop in profits this fiscal year, while Nissan said it expects tariffs will cost the company at least $3 billion.

The Wall Street Journal reported that both automakers released their guidance for the coming months on Tuesday, May 13. The downturn could rattle Japan’s economy, as automaking is one of Japan’s most important industries. Car exports make up about one-third of all products that the country sends to the United States.

What did companies predict?

Honda officials anticipated that profit would drop by 70% for the year ending in March 2026. Nissan did not forecast for the entire year but said it is planning a multibillion-dollar loss for the second quarter ending in June, on top of a $4.5 billion loss in the first three months of 2025.

At a news conference, Honda CEO Toshihiro Mibe revealed that Honda is looking for ways to boost production in the United States.

In March, the company decided to make its Civic hybrid model in Indiana starting in 2028, instead of Mexico in 2027, following Trump’s tariff announcement, according to Reuters.

In addition, Mibe said Honda increased inventory in the U.S. in the first quarter of 2025 specifically to avoid tariffs.

“We believe that conducting business under a free-trade environment is the best solution, not only for Mexico and Canada, but also for the American automotive industry,” Mibe said. “Many Honda cars sold in the U.S. are imported from Mexico and Canada, which are also subject to the 25% Trump tariffs.”

How will tariffs impact workers?

The Wall Street Journal said Nissan estimated that the tariffs will affect 300,000 vehicles produced in Mexico and 120,000 made in Japan.

In November 2024, Nissan announced it would slash 9,000 jobs under a restructuring plan. To deal with diminishing sales, it also now increased that original number to 20,000. Shares of Nissan stock have lost more than a quarter of their value this year because of falling sales and worries about the effects of American tariffs.

Toyota recently revealed that the tariffs imposed by the Trump administration will cost it at least $1.25 billion in April and May. Toyota reported that profits for the first three months of 2025 fell by 33% compared to 2024.

Jack Henry (Video Editor) and Cassandra Buchman (Digital Producer) contributed to this report.
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Why this story matters

The 25% U.S. tariffs on foreign-made autos are causing financial losses for leading Japanese automakers Honda and Nissan, with broader implications for the global auto industry and international trade relations.

Economic impact

The tariffs and substantial projected profit declines, job cuts and share price drops for Japanese automakers could influence Japan’s overall economy and auto industry.

Automaker responses

Automakers like Honda and Nissan are revising production plans, increasing U.S. inventory, and announcing restructuring measures in direct response to the tariffs and resulting market challenges.

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Behind the numbers

Honda's operating profit for the last quarter plunged 76%, landing at 73.5 billion yen ($648 million) against a forecast of 275.5 billion yen. For the full year, net profit declined 24.5% to 835.84 billion yen, missing estimates. The company expects a 70% decrease in net profit to 250 billion yen ($1.7 billion) next year, citing tariffs and global market challenges.

Context corner

Japan’s automakers, long dominant in global car markets, are now facing headwinds from shifting global trade policies and competitive pressure from Chinese electric vehicle manufacturers.

Global impact

Honda’s struggles underscore the interconnected nature of modern auto markets, where U.S. tariffs, competition from Chinese carmakers like BYD, and fluctuating demand in Asia and North America have far-reaching economic implications.

Sources

  1. Wall Street Journal
  2. Reuters

Bias comparison

  • Media outlets on the left framed Honda’s profit drop primarily as a direct consequence of Trump’s tariff policies, emphasizing hardship with emotionally charged terms like “tariff onslaught” and highlighting “steep losses” and “job cuts” that foreground labor impact and economic burden.
  • Media outlets in the center adopted a more dispassionate tone, detailing market dynamics like regional sales declines and EV demand without strong partisan coloring.
  • Media outlets on the right situated tariffs within a broader positive narrative of protecting and revitalizing the U.S. auto industry, often using more neutral or even affirming language such as “tariff hit” and stressing Honda’s substantial domestic production as a competitive advantage.

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Media landscape

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60 total sources

Key points from the Left

  • Honda Motor forecasted a 70% drop in net profit for the 2025-26 financial year due to U.S. trade tariffs impacting the global auto industry.
  • CEO Toshihiro Mibe stated that the impact of tariff policies on business is significant and complicates outlooks.
  • Honda may better withstand tariff impacts compared to competitors, as it builds over 60% of its vehicles in the U.S.

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Key points from the Center

  • Honda Motor, Japan's second-largest car manufacturer, announced a net income of 835 billion yen for the previous fiscal year, reflecting a decline of nearly 25% compared to the prior year, as reported on May 13, 2025.
  • The decline resulted largely from the 25% import toll imposed by the U.S. last month, which affected Japanese carmakers and complicated profit forecasts due to frequent tariff revisions.
  • Honda’s automobile sales fell mainly in China and the ASEAN region, while the company noted expanded hybrid vehicle sales and impacts from increased EV incentives in North America.

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Key points from the Right

  • Honda forecasts a 70% drop in net profit for the 2025-26 financial year due to U.S. trade tariffs affecting the global auto industry.
  • The company expects a net profit of 250 billion yen for the year to March 2026.
  • Honda warned that tariff impacts and recovery efforts will cost around 450 billion yen over the year.
  • The company is postponing a project to establish an electric vehicle supply chain in Canada due to flagging electric vehicle demand.

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Sources

  1. Wall Street Journal
  2. Reuters