President Trump’s decision to negotiate a break for China on tariffs is galling for Japan, which is reeling from auto sector levies that the White House has shown no sign of willingness to lift.

Japan, a top U.S. ally in Asia, was eager to advance trade negotiations with Washington, even as Mr. Trump imposed tariffs on automobiles, and threatened an across-the-board 24 percent tariff on Japanese goods.

While Beijing and others assembled plans for retaliatory tariffs, Japan rushed to Washington for trade negotiations, armed instead with commitments to buy more American goods and boost investments in the United States to $1 trillion.

In Tokyo, the sting of these unsuccessful attempts at diplomacy is becoming palpable.

On Tuesday — one day after the Trump administration agreed to temporarily nix most of its tariffs on China — two of Japan’s top automakers issued dire profit forecasts, weighed down by billions of dollars in losses linked to U.S. car tariffs.

Honda Motor said that its operating profit would fall nearly 60 percent for the fiscal year that began in April. The Japanese automaker, which produces a large amount of the vehicles it sells in the United States in Canada and Mexico, attributed the downgrade to a whopping $4.4 billion hit it expected from tariffs.

Nissan Motor suspended its profit forecast for the current year, and said that it would likely swing to an operating loss in the first quarter. The automaker, which was already restructuring its global operations before the new levies, said it would slash an additional 11,000 jobs on top of the 9,000 cuts it announced in November.

Nissan’s chief executive, Ivan Espinosa, said in a briefing that the company was “running to find countermeasures” to help offset about $3 billion in “exposure” to U.S. tariffs. If tariffs were removed, Nissan would likely break even this year, Mr. Espinosa said. “It’s very difficult to plan in the current volatility and we need to get some stability,” he said.

In Japan there is a sense of disbelief and indignation among business leaders and government officials that the Trump administration backed down on China tariffs, while maintaining punishing levies on allies like Japan with significantly smaller trade imbalances.

The fact that the U.S. prioritized China over many other trade partners in reaching a tariff agreement showed that “at this stage, allies like Japan are at a disadvantage,” said Kazuhiro Maeshima, a professor of American politics and diplomacy at Sophia University in Tokyo. “This can only be seen as disregard,” he said.

Earlier this month, a 25 percent U.S. tariff on vehicle imports was extended to cover auto parts as well. Those two levies are particularly painful for Japan because automobiles and car parts are by far its biggest export to the United States.

Economists estimate that the higher auto tariffs alone could put a big dent in economic growth in Japan this year. Factoring in broader disruptions from U.S. tariff policy, officials have predicted that growth could be more than halved.

That is because the auto sector is the backbone of Japanese industry. Nissan has already planned to shift some manufacturing to the United States to skirt tariffs, and if such moves are replicated by others, it could spark a broader hollowing out of industrial production in Japan.

Japan’s biggest automaker, Toyota Motor, said last week that while it aimed to protect production and jobs in Japan, U.S. tariffs would likely cost it more than $1 billion in April and May alone.

Honda’s chief executive, Toshihiro Mibe, said on Tuesday that the company plans to expand manufacturing in the United States to try to recover some of the billions of dollars of tariff losses it forecast. That includes moving some domestic production of its hybrid Civic to a factory it operates in Indiana, he said.

Japan is also negotiating with the United States regarding the proposed 24 percent “reciprocal” tariff, which the Trump administration announced last month and then delayed until early July. The next round of trade talks is expected later this month, but progress has stalled.

Japan has said lower tariffs on cars are a necessary condition of any trade deal, a position that Prime Minister Shigeru Ishiba reiterated in parliament on Monday.

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A $50 billion merger between Honda Motor and Nissan Motor, which would have established one of the world’s largest auto groups, has been called off.

In December, Japan’s second- and third-largest automakers said they were exploring plans to combine their operations with the goal of sharing costs and jointly developing next-generation vehicles. Both companies said in a statement on Thursday that they were walking away from talks.

The swift reversal underscores a growing recognition in the industry that sprawling auto alliances, often relied upon in the past to build scale and increase market share, may not be the answer for automakers scrambling to catch up with rapid technological changes.

Traditional automakers in Japan, the United States and Europe are facing mounting competition from newcomers like Tesla and China’s BYD, which have established a commanding lead in electric vehicles and technologies that enable semiautonomous driving and remote updates.

As the auto industry shifts toward vehicles that resemble “robots on wheels,” merging two giants to try and catch up was “just automakers going back to what they know, rather than embracing change,” said Lucinda Guthrie, the head of Mergermarket, a data provider.

Ford Motor and Volkswagen, for instance, teamed up a few years ago to work on electric vehicles and autonomous driving. The companies ultimately shut down their self-driving car initiative, and have derived few benefits from collaborating on electric vehicles.

Honda had a partnership with General Motors, and currently sells two electric sport utility vehicles, the Honda Prologue and Acura ZDX, that are manufactured by G.M. But in 2023, the companies said they would not extend their partnership beyond those two models.

Even at the outset of its talks with Nissan, Honda’s top executives faced internal resistance to merging with another automaker. Nissan is restructuring its operations after a significant profit decline, and Honda’s managers were concerned about Nissan’s financial health. They also questioned the potential benefits of a deal.

Honda eventually proposed a take-it-or-leave-it plan to make Nissan its subsidiary. Nissan rejected the offer, as it diverged from earlier ideas of creating a holding company with both brands as subsidiaries. Nissan’s leadership felt the proposal undervalued the company.

Ms. Guthrie of Mergermarket said she thought that Nissan could benefit from seeking a new partner, potentially outside the traditional automotive realm.

For both Nissan and Honda, “the pressures they face wouldn’t have changed with the merger,” Ms. Guthrie said. “You either embrace the future, or you stick with what you know,” she added. “Maybe the breakup will be what it takes.”

One possible suitor for Nissan is the Taiwanese electronics giant Foxconn. Young Liu, the chairman of Foxconn, said on Wednesday that the company would consider buying a stake in Nissan, though the preference would be to simply partner with the automaker.

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The two companies said they had signed a memorandum of understanding on Monday and that smaller Nissan alliance member Mitsubishi Motors also had agreed to join the talks on integrating their businesses.

“We anticipate that if this integration comes to fruition, we will be able to deliver even greater value to a wider customer base,” Nissan’s CEO Makoto Uchida said in a statement.

Makoto Uchida, Director, Representative Executive Officer, President and CEO of Nissan Motor Corporation, and Toshihiro Mibe, Director, President, and Representative Executive Officer of Honda, hold a joint press conference on their merger talks in Tokyo, Japan, on Dec. 23, 2024. REUTERS

Automakers in Japan have lagged behind their big rivals in electric vehicles and are trying to cut costs and make up for lost time.

News of a possible merger surfaced earlier this month, with unconfirmed reports saying that the talks on closer collaboration partly were driven by aspirations of Taiwan iPhone maker Foxconn to tie up with Nissan, which has an alliance with Renault SA of France and Mitsubishi.

A merger could result in a behemoth worth more than $50 billion based on the market capitalization of all three automakers.

Together, Honda and the Nissan alliance with Renault SA of France and smaller automaker Mitsubishi Motors Corp. would gain scale to compete with Toyota Motor Corp. and with Germany’s Volkswagen AG.

Toyota has technology partnerships with Japan’s Mazda Motor Corp. and Subaru Corp.

The two companies said they had signed a memorandum of understanding on Monday. Getty Images

Even after a merger Toyota, which rolled out 11.5 million vehicles in 2023, would remain the leading Japanese automaker. If they join, the three smaller companies would make about 8 million vehicles.

In 2023, Honda made 4 million and Nissan produced 3.4 million. Mitsubishi Motors made just over 1 million.

Nissan, Honda and Mitsubishi announced in August that they would share components for electric vehicles like batteries and jointly research software for autonomous driving to adapt better to dramatic changes centered around electrification, following a preliminary agreement between Nissan and Honda set in March.

Honda, Japan’s second-largest automaker, is widely viewed as the only likely Japanese partner able to effect a rescue of Nissan, which has struggled following a scandal that began with the arrest of its former chairman Carlos Ghosn in late 2018 on charges of fraud and misuse of company assets, allegations that he denies.

He eventually was released on bail and fled to Lebanon.

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Speaking Monday to reporters in Tokyo via a video link, Ghosn derided the planned merger as a “desperate move.”

From Nissan, Honda could get truck-based body-on-frame large SUVs such as the Armada and Infiniti QX80 that Honda doesn’t have, with large towing capacities and good off-road performance, Sam Fiorani, vice president of AutoForecast Solutions, told The Associated Press.

Nissan also has years of experience building batteries and electric vehicles, and gas-electric hybird powertrains that could help Honda in developing its own EVs and next generation of hybrids, he said.

But the company said in November that it was slashing 9,000 jobs, or about 6% of its global work force, and reducing its global production capacity by 20% after reporting a quarterly loss of $61 million.

Uchida, Mibe, and Takao Kato, CEO of Mitsubishi Motors, attend a joint news conference on Monday, Dec. 23, 2024, in Tokyo, Japan. AP

It recently reshuffled its management and Makoto Uchida, its chief executive, took a 50% pay cut to take responsibility for the financial woes, saying Nissan needed to become more efficient and respond better to market tastes, rising costs and other global changes.

Fitch Ratings recently downgraded Nissan’s credit outlook to “negative,” citing worsening profitability, partly due to price cuts in the North American market.

But it noted that it has a strong financial structure and solid cash reserves that amounted to $9.4 billion.

Nissan’s share price also has fallen to the point where it is considered something of a bargain.

Nissan’s alliance member Mitsubishi Motors also agreed to join the talks on integrating their businesses. REUTERS

On Monday, its Tokyo-traded shares gained 1.6%. They jumped more than 20% after news of the possible merger broke last week.

Honda’s shares surged 3.8%. Honda’s net profit slipped nearly 20% in the first half of the April-March fiscal year from a year earlier, as sales suffered in China.

The merger reflects an industry-wide trend toward consolidation.

At a routine briefing Monday, Cabinet Secretary Yoshimasa Hayashi said he would not comment on details of the automakers’ plans, but said Japanese companies need to stay competitive in the fast changing market.

“As the business environment surrounding the automobile industry largely changes, with competitiveness in storage batteries and software is increasingly important, we expect measures needed to survive international competition will be taken,” Hayashi said.

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A fuel leak in the presence of an ignition source could increase the risk of a fire, the automaker told the UNational Highway Traffic Safety Administration.

The recall includes various Accord, CR-V Hybrid and Honda Civic vehicles from 2023 through 2025.

The recall includes various Accord, CR-V Hybrid and Honda Civic vehicles from 2023 through 2025. AP

The recall includes 720,000 vehicles in the United States and about 61,000 in Canada.

Dealers will inspect and replace the high-pressure fuel pump if necessary with an improved part, it said.

Honda said because of a defective high-pressure fuel pump core, cracks may form inside the fuel pump, which can grow during driving, leading to possible fuel leaks or fuel smell while idling or driving.

Honda has had 145 warranty claims, and no reports of injuries related to the issue.

Honda said on Tuesday that in September it confirmed the presence of a fuel leak and odor and stopped shipment of the affected vehicles.

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