The chief economist of Citigroup, Nathan Sheets, said on Tuesday that the United States has between 40% and 45% recession possibilities because the economy undergoes the impact of tariffs imposed by President Donald Trump to China and other commercial partners.
The Trump administration announced earlier this month, and then paused, the imposition of generalized tariffs on dozens of countries, throwing the world economy into a state of uncertainty.
Sheets provides GDP growth in the second quarter, driven by consumers’ haste to make purchases before the entry into force of tariffs. The greatest impact on US growth is expected during the second half of the year, according to Sheets to its customers at a telephone conference. “Tariffs are a stagning shock for the US economy,” said Sheets.
Lee: Investors fear Trump’s attacks to Powell aggravates his losses and increases inflation
The reaction of tariff markets and, more recently, to the president’s attacks on the president of the Federal Reserve, Jerome Powell, can have a lasting impact, Sheets and the senior economist of Citigroup, Robert Sockin, warned.
Sheets said that Trump’s recent attack on Powell for not reducing interest rates preventively shows an “implicit admission of these negative effects” associated with tariffs.
The reaction of markets from the announcement of tariffs shows a loss of confidence in US policies, he added, and could affect future potential growth. “Should we review the EU real GDP growth by the next three to five years? Perhaps, if we consider that there is lasting structural damage in the economy due to the deterioration of US institutions,” said Sheets, citing as an example the threats to the Federal Reserve.
According to the economist, the degree to which US policies change depending on administration in office can create long -term instability.
Lee: IMF estimates that the risks to the global economy almost doubled by tariffs
The chief economist of CITI considers that, so far, there is no viable alternative to the dollar as a world reserve currency. The risk of a reduction in foreign holdings of treasure bonds is real, but does not believe in a simultaneous mass sale, which would harm both foreign investors and the US government.
With Reuters information
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