Barclays on Tuesday downgraded the US auto and mobility sector to "negative" from "neutral", warning that Donald Trump's tariffs could hit carmakers’ earnings and investments.
The move echoes warnings by Goldman Sachs last week, when the US brokerage cut its estimate for automobile sales in the country for this year by nearly one million units.
Trump's tariff policy has been chaotically evolving, and while he temporarily paused higher levies in a major U-turn on many countries and exempted certain Chinese products, 25% duties on autos, steel, and aluminum remain unchanged.
"Amid a highly challenging environment, making a near-term investment case for the autos sector is increasingly difficult," Barclays analyst Dan Levy said.
"Auto tariffs are seemingly here to stay, and valuations are seemingly not pricing in full tariff risk."
Earlier, French Prime Minister Francois Bayrou said the storm caused by Donald Trump’s tariffs has shuttered trust around the world with a “tsunami of destabilisation” .
“The fact that this power has gone over to the side of the aggressors is a dramatic turn of events, a warning shot that ruins our fundamental vision of the world,” Mr Bayrou added.
At a news conference to discuss France’s 2026 budget plans, he accused Trump of unleashing “a tsunami of destabilisation” and warned that Paris faced a moment of truth in terms of fixing its public finances.
Trump has paused higher tariffs on dozens of countries in a dramatic U-turn after the cost of US government borrowing jumped in the wake of his deeply controversial policies, which even some of his allies, including Reform UK leader Nigel Farage, have criticised.
But he has sparked a full blown trade war with China by hitting it with tariffs of up to 145%, with Beijing responding with import levies on US goods of 125%.
The US president has kept in force a 10% baseline tariff for a swathe of countries, including the UK.
But his deputy JD Vance has raised hopes that a trade deal could be struck with Britain.
A 25% tariff on cars, auto parts, steel and aluminum exports to the US from countries around the world is still in place.
Trump’s tariffs have wiped trillions off the value of shares around the globe.
The dollar held steady on Tuesday, trading near a three-year low against the euro and a six-month trough against the yen, as investors trying to make sense of the constant changes to Trump’s tariffs, including now possibly on cars, remained wary of US assets.
The euro, which has been one of the biggest beneficiaries of this month’s dumping of US assets, was a touch weaker on the day at $1.1343, narrowly below last week’s three-year high at $1.1474.
The dollar weakened by 0.2% against the yen to 142.855, not far off Friday’s six-month low of 142.05.
After slumping to a 10-year low against the Swiss franc last week, the dollar was flat at 0.8144 francs on Tuesday.
The pound at 12pm was 1.3240 dollars compared to 1.3174 dollars at the previous close.
Market focus has been on the ever-shifting tariff headlines, with the US removing smartphones and other electronics from its duties on China over the weekend providing some relief, although comments from the US president suggested the reprieve is likely to be short-term.
“With every U-turn in his ‘dealmaking’, the US president destroys further planning security and even more trust, which is why I ultimately do not expect any significant recovery in the US dollar as long as this uncertainty persists,” Commerzbank strategist Antje Praefcke wrote in a note.
