Citigroup Advises Against Risk Assets Amid Trump's 10% Tariff Announcement
1min read Citigroup's Kate Moore has advised investors to steer clear of risk assets following President Trump's announcement of new tariffs. The tariff policy, which includes a 10% levy on all imports to the United States and higher tariffs on specific countries, has sparked significant market reactions. Global investors have fled from various assets, including oil and Southeast Asia markets, in response to the policy.
Citigroup's view on the broadlines and hardlines sector has shifted due to the tariff announcement. According to citi analyst Steven Zaccone, the tariffs are worse than expected and significantly change the firm's outlook for the sector. The primary concerns include rising recession risk and a potential slowdown in consumer spending, which poses a significant risk for retailers exposed to big-ticket items and achieving 2025 guidance. As a result, citigroup upgraded BJ’s Wholesale to Buy from Neutral, viewing the company as a relative winner in the context of tariffs and trade downs. The firm believes that BJ’s warehouse club business model will gain market share as consumers seek value.
The tariff policy is expected to increase the risk of damage to consumer and business confidence, which could persist even if the levies are eventually rolled back. This uncertainty has led to a wave of profit warnings from companies affected by the tariffs. As the policy begins to be implemented, further market repricing may occur across politically exposed assets.
Ask Aime: What impact will the new tariffs have on U.S. retail investors?
Citigroup strategists have upgraded Treasuries to overweight following Trump's announcement, citing the clear risk to US growth. The firm's analysts note that the tariff risk, combined with the high valuations of US companies, makes the American stock market a challenging investment environment. This sentiment is reflected in the broader market, where global stocks have fallen and government bonds have rallied in response to the tariff announcement.
