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Honda Increases U.S. Output Amid Rising Tariff Uncertainty
Honda US auto production will expand as the company braces for prolonged tariff pressure under current U.S. trade policies. On August 6, Honda announced plans to raise production volumes at its U.S. plants by increasing daily operating shifts from two to three. This move allows capacity expansion with limited capital investment, according to CFO Eiji Fujimura.
Honda’s decision follows a 50% drop in operating profit for April–June 2025, down to ¥244 billion ($1.7 billion). Around ¥125 billion of the loss stems from U.S. tariffs. The new strategy aims to mitigate further losses if the 15% tariff, down from an earlier 25%, persists under the Trump administration.
Localization of Battery Materials Key to Strategy
To support increased Honda US auto production, the company must localize sourcing for key components, especially for hybrid electric vehicles. Battery materials, often imported, are now a primary focus. Fujimura emphasized that U.S. plant output can only rise if local suppliers meet volume and quality needs.
In June–July, Honda shifted Civic Hybrid 5-door production from its Yorii plant in Japan to Indiana, USA. While initially described as an "optimization strategy," the move aligns closely with tariff-driven localization trends. Final output targets remain undisclosed, pending discussions with suppliers.
Exports Surge Despite U.S. Production Dip
While Honda US auto production declined 5.1% in H1 2025 to 494,998 units, U.S.-bound exports from Japan surged. Honda reported nearly a fivefold year-over-year increase to 12,806 units during the same period. This paradox suggests ongoing demand but highlights the financial strain tariffs place on offshore production.
In response, Honda is repositioning its global strategy. The firm anticipates that the current tariff regime could represent a long-term “new norm.” As a result, production localization will remain central to future operational decisions.
ScrapInsight Commentary
Honda's accelerated U.S. production strategy underscores how trade policy is reshaping global manufacturing logistics. Local sourcing of critical materials—especially battery metals—may boost demand for North American recyclers and refiners. If tariffs persist, similar shifts from other OEMs could spur regional supply chain investment.
