Reuters, New York, April 22 Nathan Sheets, chief economist at Citigroup, stated on Tuesday that the United States has a 40% to 45% possibility of going into recession as a result of President Donald Trump’s tariffs on China and other trade partners. The world economy was in a state of turmoil after the Trump administration imposed and then halted broad penalties on dozens of nations earlier this month.
Sheets anticipates second-quarter GDP growth driven by customers scrambling to buy before tariffs take effect. In a conference call, Sheets informed clients that the second half of the year is anticipated to have the most impact on U.S. growth. “Tariffs are a stagflationary shock to the U.S. economy,” Sheets stated. Sheets and senior Citigroup economist Robert Sockin cautioned that the markets’ response to the tariffs and, more recently, to the president’s criticism of Federal Reserve chairman Jerome Powell might have a lasting effect.
Trump’s recent criticism of Powell for failing to lower interest rates in advance, according to Sheets, demonstrates a “implicit admission of these negative effects” connected to the tariffs. He noted that the response of the markets to the tariff announcement demonstrates a decline in trust in U.S. policy and might affect future potential growth. Should we lower our projections for the United States’ real GDP growth during the ensuing three to five years? Perhaps, if you believe that the economy has sustained long-term structural harm as a result of the compromise of American institutions,” Sheets stated, using the Fed’s warnings as an example.
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