Citi: Trump Tariffs May Cut S&P 500 Earnings
Citi analysts have warned that President-elect Donald Trump's proposed increase in trade tariffs could negatively impact corporate earnings, particularly for U.S. companies with significant exposure to Canada, Mexico, and global trade. With Trump's plan to impose higher tariffs, including a 10% duty on China and a 25% duty on Canada and Mexico, sectors tied to these regions could face increased costs, especially in areas like energy exports from Canada.
The analysts estimate that these tariffs could reduce S&P 500 earnings by a few percentage points in 2025 and potentially erode gross margins by over 250 basis points. However, Citi also pointed out that many companies were granted exemptions during Trump’s first term, and there is still some uncertainty about the exact nature of the tariffs in his second term. Markets are transitioning from election uncertainty to policy uncertainty, as investors remain unclear about how Trump's new term will affect the economy.
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