Two major American banks, Citigroup and Bank of America, reported stronger profits than anticipated in the first quarter of this year. This performance was attributed to traders generating higher revenues amidst the backdrop of President Donald Trump’s threats to initiate a global trade conflict.

Both banks benefited from investors adjusting their investment portfolios in response to concerns about the potential implementation of protectionist trade policies. This trend was also observed at other prominent Wall Street entities such as JPMorgan and Goldman Sachs.

President Trump’s announcement of reciprocal tariffs on April 2, referred to as Liberation Day, initially created uncertainty among market participants. However, following a sudden rise in US government borrowing costs, Trump reversed course on this decision the following week.

Citi said its Q1 profit rose 21% to $4.1 billion, or $1.96 per share, on higher revenue and lower costs from the same time last year, while BoA rose from 11% to $7.4 billion from 2024.

Analysts surveyed by the London Stock Exchange Group had forecast Citi’s $1.85 per share, while they predicted BofA earnings to amount to 82 cents per share.

Citi’s equities traders benefitted from “increased market volatility” and an uptick in client transactions, powering revenues to $1.5 billion over these past three months and up 23% year-on-year.

The bank’s fixed-income traders generated $4.5 billion in revenue, mainly in currencies and government bonds, an 8% increase from the same time in 2024.

BofA also saw equities trading revenue soar, rising by 17% to $2.2 billion, while fixed-income revenue rose 5% to $3.5 billion.

“Trading results were the star of the show,” said Stephen Biggar, banking analyst at Argus Research, who warned executives that they may see further a dip in dealmaking this year.

In the first three months of 2025, US M&A activity fell 13%, according to data from Dealogic, and Biggar said that another collapse “could doom a 2025 recovery if tariff turmoil is not resolved soon.”

Citigroup posted $1.1bn in investment banking fees during the first three months of the year, up by 14% compared with a year earlier, while BofA said investment banking fees stood at $1.5 billion, down 3% from the first three months of 2024.

BofA CEO Brian Moynihan said that the bank’s “business clients have been performing well and consumers have shown resilience.”

But in a thinly veiled reference to the ongoing threat of a global trade war, the 65-year-old warned that Americans “potentially face a changing economy in the future.”

Fraser struck a more optimistic note over Trump’s attempts to restructure America’s trade ties with dozens of countries.

“When all is said and done, and longstanding trade imbalances and other structural shifts are behind us, the U.S. will still be the world’s leading economy, and the dollar will remain the reserve currency,” she said after Citi’s results were released.

Last Friday, JPMorgan CEO Jamie Dimon told investors that the US economy would face “considerable turbulence” if Trump went ahead with his plan to slap tariffs on imported goods.