Investing.com — As Donald Trump begins his second time period as President, Citi analysts have outlined a fancy and unsure outlook for the U.S. economic system and international markets in 2025.
Whereas the U.S. economic system stays strong, Trump’s insurance policies may introduce a mixture of favorable and opposed shocks, Citi stated in its observe this week.
The U.S. economic system, already the best-performing amongst main developed markets, has been buoyed by robust client resilience and a strong company sector.
Nonetheless, Citi notes that Trump’s agenda, together with potential tariff hikes, prolonged tax cuts, deregulation, and immigration curbs, may create new uncertainties.
“Our expectations for Trump’s policies add up to a complicated mix of favorable and adverse supply shocks and demand shocks,” Citi stated.
Tariff insurance policies are stated to be a key concern. Citi’s baseline assumes a 5% rise within the U.S. efficient tariff charge, together with a 10-15% improve on Chinese language imports.
Nonetheless, Trump has floated the potential for extra extreme measures, equivalent to a 60% tariff on China or across-the-board tariffs. Whereas such measures may hurt the U.S. economic system and fairness markets, Citi believes these threats might function leverage in negotiations.
For monetary markets, the impacts will range, in keeping with the financial institution. Citi sees restricted results on U.S. equities underneath focused tariffs however warns that broader measures may stress company margins.
They observe that worldwide markets, notably in Europe and China, may face sharper hits. U.S. yields, which have risen on considerations about deficits and inflation, may climb larger.
Uncertainty is predicted to outline Trump’s presidency. “Trump seems to thrive in a world of ambiguity,” Citi remarked, including that nimble traders targeted on financial fundamentals are greatest positioned to navigate 2025.
As international tensions rise, from tariff battles to geopolitical pressures, Citi advises staying alert to Trump’s unpredictable strikes and their far-reaching implications.
