Citigroup (C) saw its stock plummet 6.67% in pre-market trading on Friday, as part of a broader selloff in the banking sector. The sharp decline comes as investors grapple with growing concerns about a potential economic slowdown and the impact of President Donald Trump's new tariffs on the financial industry.

The banking sector as a whole has been under pressure, with the KBW Nasdaq Bank Index tumbling 9.9% in the previous session. Major consumer banks, including Citigroup, have been among the hardest hit. This downturn is primarily attributed to fears of a weakening economy, which could lead to reduced loan demand and increased delinquencies, significantly impacting banks' profitability.

Analysts suggest that the escalating trade war and federal spending cuts have increased the risk of stagflation - a combination of high inflation and low economic growth. While banks are not directly affected by tariffs, the businesses and customers they serve are facing higher costs, which could lead to a broader economic slowdown. This uncertainty is causing investors to reassess their positions in financial stocks, including Citigroup, despite the bank receiving an average "overweight" rating from analysts with a mean price target of $90.08, according to FactSet.