Honda Stock (HMC) Splutters on $4B Tariff Hit, But Could it Revive Nissan Merger Plans?

Shares in Japanese car giant Honda (HMC) reversed 5% today as it warned it will take a $4.4 billion hit from Trump tariffs.

Profit Slump

However, a similar tariff blow for Japanese rival Nissan did jump start talk from analysts on a possible revival of the group’s merger plans.

Honda said it expects 25% tariffs on imports of cars into the U.S. to drive a 59% drop in full year profits to March 2026 compared with 2025. These are cars mainly imported from Canada and Mexico into the U.S. rather than directly from Japan.

The Japanese manufacturer which is trying to partly steer away from tariff pain by upping U.S. production said the higher levies would also lead to a two-year freeze on plans first revealed in 2024 to build an EV supply chain in Ontario, Canada.

That decision was also driven by a slowdown in EV demand.

Consolidation is on the Cards

Also today rival Nissan (NSANY) said it was slashing 20,000 jobs and that it was expecting to take a $3 billion hit as a result of tariff impact.

Russ Mould, Investment Director at AJ Bell, said that the problems faced by the auto industry means more consolidation in the sector is likely. “Managing supply chain issues, the problems of dealing with shifting consumer tastes and regulatory pressures could be made easier by increasing scale and diversification,” he said.

Honda and Nissan announced last December that they were going to hold $60 billion merger talks. Mitsubishi (MSBHF) another Japanese automaker, was also considering joining that group. But the talks quickly unraveled and were scrapped in February.

Toshihiro Mibe, Honda’s chief executive said there had been no development in the possible tie-up since then. However, he added: “Although the automotive industry is in a very difficult situation, we will definitely look for new directions of growth through strategic partnerships.”

Is HMC a Good Stock to Buy?

Since Honda only has one analyst rating let’s take a look at the group’s last three months performance. We can see that it is up over 10% in the last 12 weeks.