Citi Says Tariffs Could Hasten Rate Cuts
Researchers at Citigroup say that new tariffs on Canada and Mexico are likely to dent economic growth and push the Federal Reserve to lower interest rates later this year.
In a Tuesday note, they said that if the tariffs aren’t repealed in a matter of weeks, they are likely to have a substantial impact on American economic growth because of how interconnected the United States’ economy is with Mexico and Canada.
“U.S. motor vehicle production accounts for about 2.5% of real GDP, meaning even a short-lived supply-chain disruption could shave a percentage point from annualized real GDP growth,” the analysts wrote.