Barclays downgrades US auto sector due to Trump's tariff policy

Barclays downgraded the U.S. autos and mobility sector to "negative" on Tuesday, warning that persistent tariffs under President Donald Trump’s trade policy could weigh heavily on automaker earnings and investment strategies.

Barclays on Tuesday downgraded its outlook on the U.S. autos and mobility sector from "neutral" to "negative," citing concerns that President Donald Trump's tariff policies could place significant pressure on automakers’ earnings and hinder future investments.

The assessment echoes similar warnings from Goldman Sachs, which last week lowered its 2024 forecast for U.S. auto sales by nearly one million units. While President Trump has paused certain levies and provided temporary exemptions for some Chinese products, tariffs on automobiles, steel, and aluminum remain in effect.

"In an increasingly difficult macroeconomic and regulatory environment, making a near-term investment case for the autos sector is becoming more challenging," Barclays analyst Dan Levy stated. "Auto tariffs appear to be persistent, and current valuations do not fully reflect the associated risks."

Stock Downgrades and Sector Impacts

Barclays downgraded General Motors (GM) from "overweight" to "equal weight," noting that nearly half of GM’s vehicles sold in the U.S. are assembled outside the country, including its entry-level electric vehicles (EVs) produced in Mexico. In contrast, Barclays expressed a "modest" preference for Ford (F), due to a larger share of its vehicles being manufactured domestically.

Several auto technology firms were also downgraded, with Barclays citing potential delays in the adoption of advanced technologies due to pricing pressures. Companies affected include Aptiv (APTV), Mobileye Global (MBLY), and Visteon Corp (VC).

In premarket trading, shares of GM, Aptiv, Mobileye, and Visteon declined between 1% and 3%, while Ford shares slipped 0.31%.

Revised Ratings and Price Targets

Barclays updated its ratings and price targets for several major firms in the sector:

Barclays' revised outlook reflects broader market unease over the durability of tariff policies and their long-term implications for the U.S. automotive industry.

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