Investing.com -- JPMorgan analysts reduced price targets across the U.S. auto sector, citing the negative impact of new 25% tariffs on imported vehicles and parts.

The bank warned in a note Thursday that the tariffs will lead to higher vehicle prices, weaker demand, and supply chain disruptions, weighing on industry earnings in the near and medium term.

According to JPMorgan, "the implementation of 25% tariffs on all imported automobiles, in addition to imported parts over time, is unequivocally negative for the auto retail ecosystem."

The firm estimates that these tariffs could increase average transaction prices by $4,000–$5,300 per vehicle, pushing monthly payments 6–9% higher.

As a result, JPMorgan has cut several key auto stock price targets, including:

• Carvana (NYSE: CVNA ): Reduced to $325 from $365
• CarMax (NYSE: KMX ): Lowered to $65 from $72
• AutoNation (NYSE: AN ): Dropped to $175 from $195
• ACV Auctions: Decreased to $20 from $24

The firm has also downgraded several auto marketplaces, including KAR (to Neutral), CARG (to Neutral), and TRUE (to Underweight), citing concerns about slower pricing tailwinds and delayed adoption of new OEM programs.

Despite the challenges, JPMorgan remains Overweight on ACV Auctions, seeing it as "cleaner exposure to secular share gains" in dealer-to-dealer (D2D) sales.

It also expects franchise dealers to be least impacted medium-term, while used car dealers could benefit in the near term from higher demand for nearly new vehicles.