Citi cuts commercial vehicle estimates amid tariff uncertainty

Investing.com - Uncertainty around U.S. President Donald Trump's trade policies has partly led analysts at Citi to slash their full-year estimates for the commercial vehicle sector.

In a note to clients on Monday, the analysts flagged that recent conversations with commercial vehicle dealers have indicated that customer sentiment will likely "remain depressed untillwe see some combination of better spot rates, improved economic sentiment, and tariff clarity."

The brokerage cut its estimates for current fiscal year earnings at commercial vehicle firms Allison Transmission (NYSE:ALSN), PACCAR (NASDAQ:PCAR), and Cummins (NYSE:CMI), citing "order paralysis" among fleet customers as they await more details on Trump's tariff plans as well as a "sluggish" freight market so far in 2025. The analysts' price targets for these three companies were also lowered.

"We would note that our new estimates suggest the most downside risk to Street estimates for PACCAR," the strategists wrote. "We see less downside risk to 2025 estimates for both Cummins and Allison Transmission, but note that our new 2025 estimates are toward the lower end of both companies’ guidance ranges."

The comments come as markets are gearing up for April 2, when Trump is expected to unveil a new batch of tariffs that could upend longstanding international trading relationships.

Analysts have suggested that the day is shaping up to see a steep escalation of Trump’s push to rebalance the U.S.’s trading stance, a central focus of his administration since he returned the White House for a second term earlier this year.

Trump, who has said the pronouncements will be part of what he has called "liberation day," is tipped to impose fresh duties on both friends and adversaries alike, including levies matching foreign tariff barriers.

His cabinet has said a group of at least 15 countries may be targeted, although a Wall Street Journal report said a greater number of countries was being considered. The report also said that Trump was considering a flat 20% tariff on all countries the U.S. has a trade deficit with.

Last week, Trump revealed new automotive tariffs, making good on a pledge to penalize foreign importers of cars and light trucks into the U.S. Strategists have flagged that the move could raise domestic car prices, although Trump said over the weekend that he "couldn’t care less" if foreign automakers hike costs for consumers.

Trump has argued that his tariffs are necessary to correct U.S. trade imbalances, collect revenue to offset proposed tax cuts, and help bring manufacturing back into the country.

This article first appeared in Investing.com