Investing.com: Citi Warns of Impact on Corporate Earnings and Market
Citi analysts have warned that increased trade tariffs under President-elect Donald Trump have the potential to dent corporate earnings, with the broader market still not pricing in this risk. This comes as Trump has threatened to impose more duties on imports from China, Canada, and Mexico.
According to Citi, sectors with heavy exposure to Canada and Mexico, or global trade, may be sensitive to increased trade tariffs. The energy sector, in particular, is expected to be impacted, with a Reuters report stating that Trump will not exempt energy imports from his planned tariffs.
Citi estimates that tariffs could cut earnings estimates for 2025 by “a few percentage points” and erode gross margins by over 250 basis points. However, the brokerage notes that many corporations were granted relief from tariffs during Trump’s first term, and the president’s recent comments do not imply that the tariffs will be imposed without relief being granted.
The market is moving from a period of election uncertainty to one of policy uncertainty, with many unknowns surrounding what Trump’s second term will mean for markets.
