Some Tariff Impact Filtering into Customer Behaviour

• Some top executives at Wall Street banks have been showing concern about higher inflation and potential deterioration of the U.S. economy as tariffs take effect, noting there has been more cautious behaviour from corporate clients. "We have seen pauses in capex and hiring amongst our client base," Citigroup's Jane Fraser told analysts on Tuesday, July 15, 2025. "All of that said, the strength of the U.S. economy, driven by the American entrepreneur and a healthy consumer, has certainly been exceeding expectations of late."
• Citigroup expects consumer spending to cool in the second half if a spike in prices occurs. In addition, Wells Fargo CEO, Charles Scharf, said he has met with some commercial banking clients and described how they are navigating the new environment. "Many have found ways to avoid passing the 10% tariffs on to their customers," Scharf said." At the same time, they are preparing for the downside and are not growing inventories or hiring aggressively and developing contingency plans if the downside scenario occurs", he told analysts.
• Following "Liberation Day," global brokerages saw a greater chance of a recession this year, with JPMorgan calculating a 60% probability. Major firms later trimmed their gloomy outlook. JPMorgan sees the recession probability now at 40%. However, many executives said their main concern is how consumers will react if goods prices surge because of tariffs.
• Goldman Sachs CEO, David Solomon, highlighted the amount of uncertainty going ahead. "Geopolitical concerns have intensified in many regions, but notably in the Middle East, a number of trade agreements have yet to materialise, and that the ultimate impact on growth from higher tariffs is yet unknown," he told analysts on Wednesday, July 16, 2025. Overall, top executives said they expect the dealmaking pipeline to pick up in the second half of the year, as business owners get more comfortable with the new tariff environment.

(Source: Reuters)