Citi predicts complex outlook for U.S. economy under Trump's second term

From Investing.com: 2025-01-25 05:00:00

Citi analysts predict a complex and uncertain outlook for the U.S. economy and global markets in 2025 as Donald Trump begins his second term as President. The U.S. economy is currently strong, but Trump’s policies could introduce both favorable and adverse shocks, including potential tariff hikes and tax cuts.

Tariff policies are a key concern, with Citi projecting a 5% rise in the U.S. effective tariff rate, including a 10-15% increase on Chinese imports. Trump has suggested more severe measures, like a 60% tariff on China, which could harm the U.S. economy and equity markets but may be used as leverage in negotiations.

Financial markets will be impacted differently, with limited effects on U.S. equities under targeted tariffs but broader measures potentially pressuring corporate margins. International markets, especially in Europe and China, may face sharper hits, and U.S. yields could climb higher due to concerns about deficits and inflation.

Uncertainty will define Trump’s presidency, with Citi advising investors to focus on economic fundamentals to navigate the challenges of 2025. As global tensions escalate, from tariff battles to geopolitical pressures, staying alert to Trump’s unpredictable moves and their broader implications is crucial for investors.



Read more at Investing.com: Citi breaks down expectations for economy and stock market By Investing.com