Citigroup CEO Jane Fraser: Companies can handle a 10% tariff, but investment and hiring are still cautious

Taiwan • Business • 05/05 17:01
Citigroup CEO Jane Fraser: Companies can handle a 10% tariff, but investment and hiring are still cautious

On May 5th, 2025, Citigroup CEO Jane Fraser said at the Milken Institute Global Conference in Los Angeles that most corporate clients can handle a 10% tariff imposed by the United States on trade partners, but a 25% tariff is challenging. Companies are generally postponing capital expenditures and hiring, waiting for the economic outlook to clear up. She pointed out that tariffs might affect supply chains and prices, and companies are bolstering their balance sheets and tweaking supply chain strategies to deal with the uncertainty.

Key Updates

05/06 14:01

The EU plans to impose tariffs worth 100 billion euros on US goods: The risk of trade negotiations breaking down intensifies

On May 6, 2025, the European Union plans to impose retaliation tariffs on approximately 100 billion euros worth of U.S. goods as a precautionary measure to prevent potential breakdowns in trade negotiations. This action will add to the current tariffs on 21 billion euros of U.S. goods and may also extend to restrictions on services and export controls. The EU has expressed concerns about the U.S. expanding tariffs and investigations and has begun internal consultations to prepare for a comprehensive counteraction. Since negotiations began in April, progress has been slow. The EU is seeking substantial concessions but is not ruling out any options.

05/06 13:02

In April, China's port shipments rose by 7% and air transport surged by 30%. Despite the trade war, exports are still expected to grow.

Despite the escalating US-China trade war, with the US imposing tariffs as high as 145% on Chinese goods, China's trade logistics data for April shows resilience. According to data from China's Ministry of Transport, for the week ending April 27, ports across the country handled 6.7 million TEUs, an increase of 7% compared to the previous year; the number of international air cargo flights rose by 30% compared to the previous year. Bloomberg predicts a 2.5% increase in exports for April compared to the previous year, indicating strong performance despite high tariffs. The reduction in cargo ships on US-China routes highlights the pressure on exports to the US, and the Chinese government and businesses are adjusting their export strategies to tackle these challenges.

05/05 22:31

Carvana is Actively Acquiring Used Cars: Change in Strategy Due to Supply and Demand Imbalance in the U.S. Car Market

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05/05 21:01

At the Milken Global Conference, U.S. Senior Officials Confront Trade Uncertainty Stemming from Trump's New Tariff Policy.

On May 5, 2025, the 28th annual Milken Institute Global Conference was held in Beverly Hills, California, where senior leaders from the finance, technology, and government sectors discussed the trade uncertainties triggered by the new tariff policies introduced by Trump. U.S. Treasury Secretary Scott Besant stated that tariffs are crucial for reviving investment and manufacturing, but business leaders, such as Citigroup CEO Jane Fraser, noted that while a 10% tariff is manageable, the uncertainty is what hinders investment. The U.S. has imposed tariffs of up to 245% on Chinese goods, impacting the global economy, leading to a contraction in Asian manufacturing and a decline in UK exports.

05/05 17:01

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05/05 17:01

Citigroup CEO Jane Fraser: Companies can handle a 10% tariff, but investment and hiring are still cautious

On May 5th, 2025, Citigroup CEO Jane Fraser said at the Milken Institute Global Conference in Los Angeles that most corporate clients can handle a 10% tariff imposed by the United States on trade partners, but a 25% tariff is challenging. Companies are generally postponing capital expenditures and hiring, waiting for the economic outlook to clear up. She pointed out that tariffs might affect supply chains and prices, and companies are bolstering their balance sheets and tweaking supply chain strategies to deal with the uncertainty.

05/05 15:03

The United States has temporarily suspended a 46% tariff on Vietnam, with the first round of negotiations on May 7 focusing on trade fairness.

The United States originally planned to impose a 46% tariff on Vietnamese goods starting April 9, but after various negotiations, the measure has been delayed by 90 days. Vietnamese Prime Minister Pham Minh Chinh confirmed on May 5 that the two sides will hold the first round of tariff talks on May 7, with a focus on safeguarding Vietnam's interests and advancing fair trade. Vietnam has sent a technical team to the U.S. and developed strategies to mitigate the tariff impact, supporting businesses and workers.

05/05 14:01

Temu's Response to Changes in U.S. Tariff Policies: Halts Direct Shipping from China, Shifts Focus to U.S. Warehouses and Local Sellers

Faced with the U.S. terminating the "small package tax exemption" policy and increasing import tariffs on Chinese goods, Chinese e-commerce platform Temu has stopped direct shipments from China to the U.S., instead choosing to supply from local U.S. warehouses and recruiting local U.S. sellers. This move is a response to the pressure of tariffs as high as 145%, signifying Temu's shift from a low-cost strategy to a local fulfillment model.

05/05 11:30

Trump Postpones Tariffs for 90 Days: Analysis of Divergent Trends in Taiwan Panel Market Across Three Key Product Lines

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05/05 09:02

Shanghai May Day Holiday Export Goods Mega Sale: High-Quality Export Products at Discounts Up to 80% Off Sparks a Buying Frenzy

During the May Day Golden Week in 2025, many regions in mainland China, especially Shanghai, experienced a consumer boom of "export-to-domestic-demand." High-quality products originally exported to Europe and the United States were sold locally at prices as low as 20% of their original price, attracting a large number of consumers. Products included thermos cups that won the German Red Dot Award and woven shoes made for European and American brands. This phenomenon occurred because the U.S. increased tariffs, prompting companies to pivot to the domestic market and sell through exhibitions and pop-up stores, reflecting the trend of foreign trade companies actively tapping into the domestic market.

Citigroup Observations: 10% Tariff is Bearable, 25% is Challenging

At the meeting, Fraser clearly stated: "If it's 10%, most of our clients would say, 'Yes, we can handle it'; but if it's 25%, that's not necessarily the case." This statement reflects the significant difference in businesses' tolerance for different tariff levels. She added that while a 10% tariff is still manageable, higher rates could put pressure on business operations.

As one of the world's major financial institutions, Citigroup has a wide range of corporate clients, and its CEO's observations provide a window into the overall sentiment of the business community. Fraser noted that many companies are bracing for potential economic challenges, including strengthening balance sheets, delaying investment plans, and workforce expansion.

Investment and Hiring Decisions Delayed, Companies Enter "Wait-and-See Mode"

Fraser further explained: "Most companies are in a kind of holding pattern... In terms of investment spending, some expenditures are on hold, and some decisions regarding capital expenditures and hiring are being postponed." She pointed out that this cautious approach could affect overall demand and economic activity.

This shift in corporate behavior is closely related to the current uncertainty in global trade policies. The U.S. has recently implemented or plans to implement new tariff measures against several trade partners, including China, Mexico, and Canada. According to the Economic Daily, the total tariff rate on some Chinese products could reach as high as 245%, covering items like syringes and electric vehicles. Although this figure is the cumulative result of multiple tariffs, it still shows the U.S.'s tough stance on taxing imported goods.

Potential Impact of Tariffs on Supply Chains and Prices

Fraser also mentioned that tariffs could affect supply and prices, depending on the actual tariff levels. She stated: "Our clients are telling us they're gearing up for challenges." These challenges include supply chain disruptions, rising costs, and market demand fluctuations.

In recent years, global companies have faced multiple supply chain challenges, including logistical bottlenecks during the pandemic and trade restrictions caused by geopolitical conflicts. Tariffs, as a policy tool, have further exacerbated the pressure on businesses in terms of cost control and supply stability.

Background: Ongoing Changes in U.S. Tariff Policy

U.S. tariff policy has undergone several adjustments in recent years. In 2024, the Biden administration plans to increase tariffs on Chinese steel and aluminum products from the original 0% to 17% up to 25%. In February 2025, former President Trump announced a 10% tariff on Chinese goods imported to the U.S. and a 25% tariff on Canadian and Mexican goods. These policies have triggered retaliatory measures from multiple countries, including Canada imposing retaliatory tariffs on U.S. goods.

Additionally, the U.S. has ended the tariff exemption for small parcels under $800 from China and Hong Kong, imposing tariffs as high as 145%. This change has directly impacted cross-border e-commerce platforms like SHEIN and Temu, with some product prices increasing by 40% to 100%, or even being removed from the platforms.

Corporate Response Strategies: Strengthening Financial Health and Risk Management

Facing an uncertain policy environment, companies are adopting various response measures. Fraser pointed out that some companies are strengthening their balance sheets to boost resilience against risks. This includes reducing debt, increasing cash reserves, and adjusting supply chain strategies.

Moreover, companies are re-evaluating their global layout and production bases to reduce reliance on a single market. This "de-risking" strategy has become an important consideration for multinational companies in the current geopolitical and economic environment.

References

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