Citigroup CEO: US Businesses Delay Investments, Hiring Amid ‘Limbo’ of Tariff Uncertainty

Citigroup CEO Jane Fraser said Monday that most of the Wall Street bank’s business clients believe they can cope with U.S. tariffs of up to 10% on foreign countries, including China, but that levies any higher would make things difficult.

Fraser, speaking at the Milken Institute Global Conference in Los Angeles, warned that companies across goods and services were waiting to make investments and hire new employees until they were more certain about the business and economic climate.

“If it is 10%, most of the clients we talk to say, ‘Yeah, we can absorb that.’ If it is 25%, not so much,” Fraser said, according to a video uploaded by Bloomberg.

The Trump administration has placed duties of 145% on imports from China, the first arrow in a burgeoning trade war between the two nations. Other U.S. levies against most other countries are on a 90-day pause that ends July 9. Trump said in an interview with NBC’s “Meet the Press with Kristen Welker” on May 4 that “at some point” he would lower tariffs on China.

Regarding the White House’s fluctuating agenda, Fraser said that Trump’s tariff agenda was playing out in three “phases.” The first, she said, “is the one we’re seeing right now, where we’re seeing the pull forward of some of the spending from the consumers and from corporates.” She referred to but did not specify recent economic data. The U.S economy contracted 0.3% over January through March.

The second phase “that’s coming through” revolves around the fact that companies “are in a bit of a limbo land” regarding decisions on investments and hiring. “There’s a wait and see going on at the moment where everyone sees how this will all play through,” Fraser said.

The third phase, she added, would be when tariff decisions are finalized and their impact on consumer demand becomes clear.

“It’s certainly been a fluid few weeks, and there’s been a lot that’s been coming at us pretty hard and fast in terms of announcements and changes,” she said. “I think you’ve got to recognize that this is going to play out slow, and we’ve got to keep a perspective and be very mindful about what the longer term looks like amidst all the announcements.”

But the short term is also a concern, as some companies have suspended their decisions on capital investments or hiring. Those moves, Fraser said, “will have an impact on demand in the economy.”