As the US presidential election approaches and polls indicate a strong lead for Donald Trump, JPMorgan analysts have outlined potential impacts on the auto sector if he wins, according to an article by Investing on Sunday. The key areas of concern are the additional tariffs and changes to environmental regulations. JPMorgan suggests that a Trump victory could lead to a uniform increase in tariffs on automobiles imported from outside the North American Free Trade Agreement (NAFTA) region. Currently, automobiles imported from Mexico are exempt under certain conditions, but these exemptions could be revoked. This would significantly affect Japanese automakers like Subaru and Mazda Motor, which have only 50 per cent and zero local production in North America, respectively. In contrast, Honda and Nissan, with nearly 100 per cent local production, would face lower risks. 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. Conversely, Honda and Toyota, with higher local production rates, would be less affected. The potential revision of the US – Mexico – Canada Agreement (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. A Trump presidency might also see a relaxation of greenhouse gas (GHG) regulations that were tightened under the Democratic administration. Analysts state that this could provide some relief to automakers by reducing compliance costs, though it would also have broader environmental implications. In summary, JPMorgan believes 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. Attribution: Investing
