Business Overview

In a new Citi Research note, global macro strategist Giammarco Miani and team look at what may lie ahead for U.S. tariff negotiations. With the U.S. effective tariff rate still at historic levels, China negotiations remain key for markets, but we look elsewhere given how high U.S. –China tensions are.

In a new Global Economic Outlook & Strategy report from Citi Research, a team of analysts and economists led by Chief Economist Nathan Sheets looks at the challenging headwinds for the global economy created by U.S. tariff rates’ rise to historically high levels.

The escalating trade conflict looms as a negative demand shock for euro-area exports and potentially an even bigger positive supply shock from trade redirection.

Pausing reciprocal tariffs excluding China doesn't mean the U.S. economy has avoided slower growth and higher inflation, as the average U.S. effective tariff rate remains about 21 percentage points above its level at the start of 2025. Uncertainty will persist; we still expect a Fed cut in May or June.

The U.S. tariffs are exerting an immediate impact on the financial markets, but they also have long-term consequences for economies — including a fundamental challenge to Europe’s longstanding export-led growth model.

With U.S. tariffs raised to the highest level in more than a century, we consider their implications for the U.S. and global economies. Our analysis addresses the nature of the shock, potential effects on growth, and the challenge for U.S. monetary policy, while spotlighting key questions that remain unanswered.