Toyota and Honda could be hit hardest by proposed 50% US tariffs on Canadian cars

The two Japanese manufacturers could be particularly exposed because of their significant production operations in Canada.

Together, Toyota and Honda account for more than three-quarters of vehicles manufactured in the country.

Canadian-built vehicles represent around 24% of Honda's US sales and 17% of Toyota's, according to the reports.

Popular models produced in Canada include the Honda CR-V and Toyota RAV4.

Canadian production could be affected

Analysts warn that the higher tariffs could make it significantly more expensive for the companies to supply vehicles from their Canadian factories to the crucial US market.

Both manufacturers could face difficult choices, including absorbing the additional costs, raising prices for American customers or reducing production at Canadian plants.

Some analysts have warned that production lines could even be temporarily closed if the tariffs take effect.

Moving more manufacturing to the United States would be another option, but expanding or relocating production would require significant investment and could take several years.

North American supply chains under pressure

The proposed tariffs could also have wider consequences for the highly integrated North American automotive industry.

Vehicle components can cross between Canada and the United States several times during the manufacturing process, meaning additional trade barriers risk increasing costs throughout the supply chain.

Canada produces around 1.2 million vehicles a year, while its automotive industry directly and indirectly supports hundreds of thousands of jobs.

The January start date leaves several months for further negotiations, but analysts say continued uncertainty over US trade policy is already making it more difficult for car manufacturers and suppliers to plan future production and investment.