Honda Motor Co. (HMC) shares plunged 5.13% in pre-market trading on Tuesday after the Japanese automaker delivered a grim financial outlook, citing the heavy impact of U.S. tariffs on foreign-made cars and a slowdown in electric vehicle (EV) demand.

The company forecasted a staggering 70% drop in net profit to 250 billion yen ($1.68 billion) for the fiscal year ending March 2026, down from 835.8 billion yen in the previous year. Honda also projected a 6.4% decline in revenue to 20.3 trillion yen, reflecting growing concerns about the adverse effects of President Trump's tariffs on the crucial Japanese automotive industry.

Honda's Chief Executive Officer Toshihiro Mibe addressed the challenges in a news conference, stating, "The impact of tariff policies in various countries on our business has been very significant, and frequent revisions are being made, making it difficult to formulate an outlook." Mibe added that Honda would examine the impact of U.S. tariffs on supply chains and "carefully" make any decisions on pricing changes.

Adding to investor concerns, Honda announced it would postpone its previously revealed plan to build an EV supply chain in Ontario, Canada, for approximately two years. The company attributed this decision to the current slowdown in EV demand, further highlighting the uncertainties surrounding Honda's future growth strategies and its ability to compete in the rapidly evolving automotive market.

The automotive giant estimates that U.S. tariffs could potentially wipe out up to 650 billion yen (about $4.4 billion) from its annual profit, representing nearly half of last year's earnings. In response to these challenges, Honda has already started exploring ways to boost production capacity in the U.S. to mitigate the long-term impact of tariffs.

As global automakers grapple with the dual pressures of protectionist trade policies and the transition to electric vehicles, Honda's stark profit warning serves as a sobering reminder of the headwinds facing the industry. Investors will be closely watching how the company navigates these challenges in the coming months and whether it can successfully adapt its strategies to the changing automotive landscape.