Toyota and Honda could face major disruption if a proposed 50% U.S. tariff on Canadian car imports takes effect on January 1. The Japanese automakers produce more than three-quarters of all cars made in Canada, and Canadian-built vehicles accounted for almost a quarter of Honda’s U.S. sales and 17% of Toyota’s last year, the highest shares among major automakers, according to Barclays analysts. The tariff would double the current 25% levy and could force both companies to close some Canadian assembly lines. Canada’s auto industry produces around 1.2 million cars annually and indirectly supports some 427,000 jobs. Toyota exports the RAV4 from Canada to the United States, while Honda exports the CR-V; both are among the best-selling U.S. SUVs. The proposal comes as Japanese automakers face competition from low-cost Chinese electric vehicles in Southeast Asia, Europe and Latin America, although Chinese companies such as BYD are not allowed in the United States. Toyota said U.S. tariffs cost it about 1.4 trillion yen ($8.8 billion) in the last financial year and is expanding domestic production, including up to $10 billion of investment over five years and a new $3.6 billion plant in Texas. Honda, which is trying to reverse losses in its car business, has said uncertainty over USMCA (the North American free-trade agreement) could affect plans for an eighth North American assembly plant. Analysts say redirecting Canadian vehicles to other markets and replacing U.S. supply would be difficult because vehicles are tailored to U.S. requirements and factories elsewhere may have limited capacity.