Investing.com -- Barclays downgraded its outlook on the U.S. Autos & Mobility sector to Negative, citing mounting risks from auto tariffs that threaten to weigh on earnings, investment, and consumer demand across the industry.

Brokerage said it has now embedded tariff scenarios into its financial models, slashing 2025 EBIT estimates for Ford and General Motors (NYSE:GM) by 60% and 40%, respectively.

Auto suppliers are also expected to take a hit, with profit forecasts reduced by 10–25% on average.

Barclays said the risks from tariffs under President Donald Trump, posing long-term structural challenges. 

The bank downgraded GM to Equal Weight and expressed a slight preference for Ford over its Detroit rival. 

It also cut ratings on Aptiv (NYSE:APTV), Mobileye, and  Visteon  (NASDAQ:VC) to Equal Weight, citing risks to auto tech investment and slowed electric vehicle adoption. 

Autoliv (NYSE:ALV) was the only upgrade in the Barclays note, lifted to Overweight.

Barclays warned that a weaker consumer backdrop could amplify the pain, as higher vehicle prices due to tariffs may collide with softening economic conditions.

The result could be falling volumes, disrupted supply chains, and higher costs with “limited offsets.”

Valuations, the bank argued, do not fully reflect these risks. 

While some might argue that auto stocks trade at all-time low multiples, Barclays believe consensus estimates have priced in very little tariff risk

Tariffs could also cast a shadow over automakers’ longer-term electrification plans. With EV production facing rising costs and uncertain demand, Barclays sees companies potentially scaling back on advanced content and tech investments to protect margins.

In a downside scenario, OEM earnings could be pressured by more than 70%, and supplier earnings by 30% on average, the bank cautioned.

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