Honda has lowered its expected tariff burden for the fiscal year ending March 31, reducing the projected impact from 450bn yen to 310bn yen, according to comments made during its February 10 earnings call.
Executives said the company was able to partially offset the effect of tariffs through logistics adjustments and increased procurement that complied with the rules of the United States-Mexico-Canada Agreement. Even so, Honda acknowledged that some tariff-related costs will continue beyond the current fiscal year.
Chief financial officer Eiji Fujimura said the company intends to monitor costs closely and expand local procurement wherever possible in an effort to strengthen control over its cost base.
The tariff update came as Honda also reported an operating loss of 267bn yen for the first nine months of 2025, reflecting wider challenges tied to changes in US electric vehicle policy and growing supply chain pressures. Executive vice president Noriya Kaihara said the carmaker is facing elevated risk linked to global procurement expansion and intensifying competition from emerging manufacturers, adding that Honda must fundamentally review its strategy to rebuild competitiveness.
Supply issues remain central to that review. Kaihara said the semiconductor shortage that affected Honda in the third fiscal quarter is beginning to ease. However, the company is now identifying a new area of concern: rare earth supply chains influenced by Chinese export controls.
Honda said rare earth exports from China are still moving, but permit approvals have become slow and unpredictable, making it more difficult to rely on timely deliveries. In response, the company has started filing export applications quickly, building extra stock of components that are difficult to redesign, and working more closely with suppliers to assess their exposure to rare earth materials.
In the longer term, Honda wants to redesign components, including motors and meters, to remove rare earth elements where possible. Kaihara cautioned, however, that this process will take years.
At the same time, the automaker is changing how it manages supplier relationships. Fujimura said Honda is introducing stronger multi-sourcing strategies, more rigorous inventory management and deeper risk assessments that extend beyond direct suppliers to upstream material sources.
Where single sourcing remains unavoidable for technical or cost reasons, Honda plans to tighten monitoring further up the chain and maintain buffer inventories to support business continuity. Fujimura acknowledged that Honda has historically depended heavily on suppliers and said that model is now under full review.
