Researchers at Citigroup say that new tariffs on Canada and Mexico are likely to dent economic growth and push the Federal Reserve to lower interest rates later this year.
In a Tuesday note, they said that if the tariffs aren’t repealed in a matter of weeks, they are likely to have a substantial impact on American economic growth because of how interconnected the United States’ economy is with Mexico and Canada.
“U.S. motor vehicle production accounts for about 2.5% of real GDP, meaning even a short-lived supply-chain disruption could shave a percentage point from annualized real GDP growth,” the analysts wrote.