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 sturdy, Trump’s insurance policies might introduce a mixture of favorable and hostile shocks, Citi stated in its notice this week.
The U.S. economic system, already the best-performing amongst main developed markets, has been buoyed by sturdy shopper resilience and a sturdy company sector.
Nonetheless, Citi notes that Trump’s agenda, together with potential tariff hikes, prolonged tax cuts, deregulation, and immigration curbs, might 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 price, together with a 10-15% enhance on Chinese language imports.
Nonetheless, Trump has floated the potential of extra extreme measures, corresponding to a 60% tariff on China or across-the-board tariffs. Whereas such measures might hurt the U.S. economic system and fairness markets, Citi believes these threats might function leverage in negotiations.
For monetary markets, the impacts will differ, based on the financial institution. Citi sees restricted results on U.S. equities below focused tariffs however warns that broader measures might strain company margins.
They notice that worldwide markets, significantly in Europe and China, might face sharper hits. U.S. yields, which have risen on issues about deficits and inflation, might climb increased.
Uncertainty is anticipated to outline Trump’s presidency. “Trump seems to thrive in a world of ambiguity,” Citi remarked, including that nimble buyers 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.