Citi no longer sees a conclusion to the trade war with China before the next U.S. presidential election, the investment bank said in a research report on Wednesday.
"[The] base case for the trade war now is no deal before the 2020 US election," Citi said.
Citi's shift represents a departure from others on Wall Street who see a trade deal likely happening before the election next year. UBS in May said a trade deal was not imminent but should be expected "just before 2020."
Negotiations between the U.S. and China broke down last month and both countries added new tariffs on each other, beginning on Sept. 1. As the trade war continues, Citi expects U.S. economic metrics, such as consumer fundamentals, will "likely deteriorate further," the firm said.
"Implied probabilities of a 2020 recession are now high enough to warrant caution," Citi said.
As a result of its added caution, Citi said it was cutting its view of U.S. equities to neutral from overweight.
President Donald Trump has recently suggested that, if he wins reelection, he will be even tougher on China and take even more drastic action.
– CNBC's Patricia Martell contributed to this report.