Honda Motor Co. has predicted that its operating profit will drop by 59% this financial year. The company expects to earn 500 billion yen (around $3.38 billion) by March 31, 2026, compared to 1.21 trillion yen in the previous year.

This big decline is mainly due to the effects of tariffs on foreign-made cars introduced during US President Donald Trump’s term, as well as growing competition from Chinese electric vehicle makers.

In response to these challenges, Honda has decided to delay its electric vehicle supply chain project in Ontario, Canada. The project was supposed to start in April 2024 but will now be pushed back by about two years because of slower demand for EVs.

Honda also said that tariffs in different countries will likely cost the company around 650 billion yen in profit for the 2026 fiscal year. This includes about 300 billion yen in costs related to importing roughly 550,000 finished vehicles.

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However, the company plans to reduce this impact by around 200 billion yen through cost-cutting and other measures.

Earlier this year, Honda stopped merger talks with Nissan, but the two companies are still working together on technology. Honda’s CEO, Toshihiro Mibe, said the company is looking for new growth opportunities through strategic partnerships, even as it faces tough times in the auto industry.