Tariff pause does not mean U.S. avoided growth slowdown, says Citi

Citi U.S. chief economist Andrew Hollenhorst says President Trump pausing reciprocal tariffs excluding China does not mean the U.S. economy has avoided a slowdown in growth and rise in inflation. The 10% baseline tariff, additional 125% tariffs on most Chinese goods, and sector-specific tariffs raise the average U.S. effective tariff rate by about 21 percentage points from its level at the beginning of the year, the economist tells investors in a research note. Citi believes uncertainty over trade will persist and non-China imports may now surge, “damping growth” in Q2. The firm continues to expect the Federal Reserve to cut policy rates in May or June.