Japanese automaker Honda is planning to ramp up production in the US to mitigate the impact of higher tariffs, the company said on 6 August.
The company is also trying to prepare for a possible sustained shift in trade dynamics where the current tariff structure could become a long-term reality.
Honda aims to boost production volumes at its US plants by raising run rates, according to Eiji Fujimura, the company's chief financial officer. This could be made possible by increasing the daily operating shifts from two to three, Fujimura said, adding that the strategy would allow the company to increase output with minimal additional investments.
The announcement follows a sharp decline in Honda's operating profit, which fell by nearly 50pc on the year to ¥244bn ($1.7bn) during the April-June quarter. The company attributed around ¥125bn to the impacts of the US tariff.
The company needs to prepare for the possibility that the current trade system with higher US tariffs under the Trump administration could become a "new norm", Fujimura said. Tokyo and Washington reached a trade deal last month, under which the US set 15pc tariffs on Japanese auto imports. This is a notable reduction from the previously announced 25pc in April, but significantly higher than the 2.5pc rate in place before the Trump administration took office in January.
Honda will have to source more key components such as battery materials locally in order to achieve higher output at its US facility, Fujimura said, particularly for hybrid electric vehicles.
Honda has not yet disclosed details on its new production target in the US, but the company noted that it needs to consult with component suppliers first before finalising this.
Honda told Argus in April that the company will stop manufacturing its Civic Hybrid 5-door model at the Yorii plant in Japan during June-July, and switch the production to its US plant in the state of Indiana. But the company only described the move as part of an "optimisation strategy", without explicitly linking the decision to tariff concerns.
The car maker produced 494,998 units of vehicles in the US during the first half of 2025, down by 5.1pc from a year earlier, marking the first year-on-year decline in three years. Meanwhile, the company's exports to the US increased almost fivefold on the year to 12,806 units during the same period, according to the firm.
