Citigroup Plunges 4.58% on New Tariff Concerns

On April 3, 2025, Citigroup's stock price dropped by 4.58% in pre-market trading, reflecting investor concerns over the potential economic impact of new tariffs announced by the U.S. President.

Citigroup analysts have highlighted that the new tariffs could significantly affect the automotive industry, with major manufacturers like Porsche, Stellantis, and Mercedes-Benz facing a potential 16% reduction in their pre-tax profits for 2025-2026. The analysts noted that European manufacturers export approximately 1.3 million vehicles to the U.S. from Europe, Canada, and Mexico, generating around 70 billion euros in revenue. A 25% tariff on all imported goods would substantially increase costs, although factors such as reduced transfer prices, potential price increases in the U.S., and shifts towards higher-priced vehicle models could mitigate some of the impact, resulting in a net effect of around 10 billion euros on pre-tax profits over the two-year period.

Citigroup's global rates trading strategist, Ben Wiltshire, commented that the effective tariff rate on all U.S. imports is at its highest level in over a century, underscoring the significant economic risks posed by the new tariffs. This sentiment was echoed by other analysts who noted that the tariffs could lead to a confidence crisis in the U.S. dollar, which has already fallen to a six-month low. The potential for increased economic uncertainty, government layoffs, and funding cuts, along with higher tariff costs, could further dampen corporate hiring and investment, adding to the economic headwinds facing Citigroup and other major banks.