“The impact of tariffs is clearly Standing For the US economy, ”said Nathan Sheets, chief economist of Citigroup, during a conference with clients held on Tuesday. At the same time, he explained that the combination of Lower growth with greater inflationary pressures represents a serious challenge for economic policy.
Tariffs imposed on China and other commercial partners, as well as uncertainty about their application, are generating negative effects both on markets and investor confidence.
The US could grow in the second quarter and the tariff’s coup will feel in the second half of the year
He US government He announced recently generalized tariffs To dozens of countries, although he then put them in pause. Trump’s position, added to global commercial tensions, generated a climate of instability that directly affects world economic performance.
Sheets said that a growth of the gross domestic product (GDP) is expected in the second quarter of the yearmainly driven by a Acceleration of consumptionsince households would be advancing purchases in the expectation of new price increases. However, The greatest negative impact on growth is projected for the second half of the year.
Both Sheets and Citigroup’s senior economist, Robert Sockalerted on the long -term consequences that could be derived from the recent climbing of tensions between the White House and the Federal Reserve. In particular, they highlighted the impact that Trump’s attacks could have to the head of the Fed, Jerome Powellfor not reducing preventively interest rates. “That criticism is an implicit admission of the adverse effects that tariffs are having”SHEETS said.
Loss of trust
The economist also warned that the negative reaction of the markets could have lasting consequences, affecting the perception of the institutional solidity of the United States, which in turn can have an impact on the future potential growth.
“Should we check the real GDP projections of the US for the next three to five years? Maybe, if we assume that there is lasting structural damage due to institutional weakening,” said Sheets, citing as an example the threats to the Fed.
On the other hand, he indicated that until now there is no Viable alternative to the dollar as world reserve currency. The risk of reducing foreign treasure bond holdings is realbut does not believe in a simultaneous mass sale, which would harm both foreign investors and the US government.
Source: Ambito
