Self-plagiarism and citation when working on 2 papers simultaneously
Yes, I would cite paper A in paper B, and I would cite paper B in paper A. Initially the citation would be something like “in submission” with a URL for the referees. As both papers work through the pipeline, that citation would evolve into either a refereed publication venue if possible, or a preprint server if not, to ensure that future readers can follow the link.

On the other hand, I would also write both papers from scratch, without sharing text between them, because (in my experience) that leads to better-written papers. So self-plagiarism isn’t an issue.