Distress is spreading in Japan’s auto sector, putting into question Tokyo’s approach to trade negotiations with the United States.

Honda has reported its profit for the fiscal year through March slipped 24.5% from the previous year as its vehicle sales in China dropped.

Japan’s economy likely suffered a contraction in the first three months of this year, signaling underlying fragility even before US tariff measures started hitting the country in earnest, according to economists surveyed by Bloomberg.