Analysis:Toyota and Honda may get stuck with the bill for Trump’s Canada tariffs

U.S. President Donald Trump has proposed a 50 percent tariff on Canadian car imports, which could impact Toyota and Honda significantly. These two Japanese automakers account for more than three-quarters of all cars made in Canada. If the tariffs go into effect on January 1, analysts believe that Toyota and Honda may need to shut down some production lines.

Despite the possibility of reaching a deal, the timing of the U.S. tariffs could not be worse for Japanese automakers, as they face competition from low-cost Chinese EVs in markets like Southeast Asia, Europe, and Latin America. U.S. remains Toyota and Honda's biggest market, where Chinese rivals like BYD are not allowed. Canada's auto industry produces around 1.2 million cars a year, indirectly supporting 427,000 jobs.

The proposed tariffs could force Toyota and Honda to close some of their Canadian assembly lines and find ways to make up supply for the U.S. market.