Citigroup CEO Jane Fraser said on Monday most of the bank’s business clients could absorb U.S. tariffs of 10% on the nation’s trading partners, but cautioned that companies are waiting on investments and hiring until there is more economic clarity.

“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 at the Milken Institute Global Conference in Los Angeles.

“Most companies are in a bit of limbo land, … and in that investment spending, some of that is being suspended, some of the decisions on capex and hiring are on hold,” she said. “That will have an impact on demand and the economy.”

Fraser said tariffs could have an impact on supply and prices, depending on tariff levels.

“What we are hearing from clients is that they are prepping for headwinds,” she said, adding that some are taking actions such as strengthening balance sheets.

The U.S. economy contracted for the first time in three years in the first quarter amid a flood of imports to beat President Donald Trump’s tariffs. The International Monetary Fund has forecast that U.S. gross domestic product will grow only 1.8% in 2025.

Source: Globalbankingandfinance