Citi Warns of Global Growth Slowdown Despite Temporary Economic Resilience Amid US Tariffs

While the global economy has shown surprising strength in the face of rising US trade tariffs, analysts at Citi are warning that this resilience may be short-lived. In a new market update, the bank describes current stability as the “calm before the storm”, forecasting a slowdown in global economic activity in the coming months.

Led by Chief Global Economist Nathan Sheets, the Citi team highlighted that the delayed rollout and partial suspension of US tariffs—initially announced by President Donald Trump in April—have helped postpone the full economic impact. However, the underlying risks to global trade and growth remain firmly in place.

US Tariffs Reach Highest Levels Since the 1930s

Although some duties have been softened or postponed to allow ongoing negotiations, blanket 10% tariffs are still in effect, along with specific levies on aluminium, steel, and automotive parts. According to estimates cited by Citi, the effective US tariff rate is now at its highest level in nearly a century.

“The initial impact on output has been muted, but these tariffs will eventually weigh heavily on global demand,” the report said.

Pre-Tariff Stockpiling Masks Deeper Risks

Citi analysts noted that recent economic strength may be partly artificial. US companies and consumers have accelerated purchases ahead of tariff deadlines, temporarily shielding the economy from more immediate damage. However, this pre-tariff stockpiling could lead to a sharp decline in spending later.

Global Growth Outlook Weakens for Second Half of the Year

Citi has revised its global growth forecast down to 2.3% for the year, a drop from 2.8% in the previous year. The firm expects developed markets to bear the brunt of the downturn, with growth in those economies projected to slow to just above 1%.

(Sources: investing.com, reuters.com, ChatGOPT)