JPM: What a Trump presidency might mean for the auto sector

With the U.S. presidential election approaching and polls indicating a strong lead for Mr. Trump, JPMorgan analysts have outlined potential impacts on the auto sector if Trump wins.

The key areas of concern are additional tariffs and changes to environmental regulations.

Tariffs on Imported Automobiles: The investment bank says a Trump victory could lead to a uniform increase in tariffs on automobiles imported from outside the NAFTA region.

Currently, automobiles imported from Mexico are exempt under certain conditions, but according to JPMorgan, these exemptions could be revoked.

Analysts note this would significantly affect Japanese automakers, which import a notable percentage of their vehicles from Japan, Canada, and Mexico. For instance, Subaru (OTC:) and Mazda Motor (OTC:), with only 50% and zero local production in North America respectively, would face higher risks compared to Honda (NYSE:) and Nissan (OTC:), which have nearly 100% local production in the region.

Impact on Earnings: JPMorgan’s assessment indicates that Mazda Motor and Subaru would likely be significantly impacted by the tariffs due to their high import ratios from non-USMCA regions.

In contrast, analysts say that Honda and Toyota (NYSE:), with higher local production rates, would be less affected. JPMorgan adds that the potential revision of the USMCA agreement in July 2026 could also exacerbate the impact on Honda and Nissan if tariff exemptions on imports from Canada and Mexico are terminated.

Environmental Regulations: A Trump presidency might also see a relaxation of greenhouse gas (GHG) regulations that were tightened under the Democratic administration, according to JPMorgan. Analysts state this could provide some relief to automakers by reducing compliance costs, though it would also have broader environmental implications.

In summary, JPMorgan feels a Trump win could bring significant changes to the auto sector, with increased tariffs posing risks, particularly to those with higher import ratios from non-USMCA regions, and relaxed environmental regulations offering mixed consequences.