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Investing.com —\u00a0As Donald Trump begins his second term as President, Citi analysts have outlined a complex and uncertain outlook for the U.S. economy and global markets in 2025.\u00a0<\/p>\n
While the U.S. economy remains robust, Trump’s policies could introduce a mix of favorable and adverse shocks, Citi said in its note this week.<\/p>\n
The U.S. economy, already the best-performing among major developed markets, has been buoyed by strong consumer resilience and a robust corporate sector.\u00a0<\/p>\n
However, Citi notes that Trump\u2019s agenda, including potential tariff hikes, extended tax cuts, deregulation, and immigration curbs, could create new uncertainties.\u00a0<\/p>\n
“Our expectations for Trump\u2019s policies add up to a complicated mix of favorable and adverse supply shocks and demand shocks,” Citi said.<\/p>\n
Tariff policies are said to be a key concern. Citi\u2019s baseline assumes a 5% rise in the U.S. effective tariff rate, including a 10-15% increase on Chinese imports.\u00a0<\/p>\n
However, Trump has floated the possibility of more severe measures, such as a 60% tariff on China or across-the-board tariffs. While such measures could harm the U.S. economy and equity markets, Citi believes these threats may serve as leverage in negotiations.<\/p>\n
For financial markets, the impacts will vary, according to the bank. Citi sees limited effects on U.S. equities under targeted tariffs but warns that broader measures could pressure corporate margins.\u00a0<\/p>\n
They note that international markets, particularly in Europe and China, could face sharper hits. U.S. yields, which have risen on concerns about deficits and inflation, could climb higher.<\/p>\n
Uncertainty is expected to define Trump\u2019s presidency. \u201cTrump seems to thrive in a world of ambiguity,\u201d Citi remarked, adding that nimble investors focused on economic fundamentals are best positioned to navigate 2025.\u00a0<\/p>\n
As global tensions rise, from tariff battles to geopolitical pressures, Citi advises staying alert to Trump\u2019s unpredictable moves and their far-reaching implications.<\/p>\n<\/div>\n