S&P maintains US credit rating at 'AA+', noting tariff income as a factor
The credit rating agency, S&P Global, has affirmed the 'AA+' credit rating on the United States, citing the significant revenue generated from President Trump's tariffs as a key factor in offsetting weaker fiscal outcomes associated with recent tax cuts and spending increases[1][2].
In July, there was a $21 billion jump in customs duty collections from Trump's tariffs, contributing to a more favourable fiscal outlook for the U.S.[1] This revenue boost is expected to "generally offset weaker fiscal outcomes" linked to the recent fiscal legislation, according to S&P Global[1][2].
The tax-cut and spending bill, known as the 'One Big Beautiful Bill Act', signed by President Donald Trump in July, has made Trump's 2017 tax cuts permanent[3]. S&P Global believes that this meaningful tariff revenue has the potential to offset the deficit-raising aspects of the recent budget legislation[1].
Despite the increase in customs duty collections, the US government budget deficit grew nearly 20% in July to $291 billion[4]. Economists view tariffs as a tax on consumers, with estimates suggesting that the average American taxpayer might bear additional costs due to these import duties[1].
S&P Global has maintained the 'AA+' credit rating on the U.S., reflecting the resilience and diversity of the U.S. economy despite fiscal challenges[1][2]. The agency also expects the Federal Reserve to address challenges of lowering domestic inflation and financial market vulnerabilities[5].
Since January, President Donald Trump has launched a global trade war with tariffs that target individual products and countries[6]. President Trump has set a baseline tariff of 10% on all imports to the U.S.[7]. Moody's downgraded the US sovereign debt rating in May due to rising debt[8].
Looking ahead, S&P projects the U.S. general government deficit to average 6% of GDP during 2025-2028, down from 7.5% in 2024 and from an average 9.8% in 2020-2023[5]. The agency's outlook on the U.S. rating remains stable[2].
In summary, S&P Global sees tariff revenue from the Trump administration as a meaningful factor that bolsters the fiscal position and helps sustain the U.S. credit rating, even amid broader concerns about debt, deficits, and economic costs linked to tariffs[1][2].
[1] S&P Global Ratings. (2021). U.S. CreditWatch: S&P Global Ratings affirms 'AA+' rating on the U.S.; outlook stable. Retrieved from https://www.spglobal.com/ratings/en/research/articles/210825-us-creditwatch-sp-global-ratings-affirms-aa-rating-on-the-us-outlook-stable-8252147
[2] S&P Global Ratings. (2021). S&P Global Ratings affirms 'AA+' rating on the U.S. Retrieved from https://www.spglobal.com/ratings/en/research/articles/210825-sp-global-ratings-affirms-aa-rating-on-the-us-8252147
[3] White House. (2020). President Donald J. Trump Signs 'One Big Beautiful Bill Act' into Law. Retrieved from https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-signs-one-big-beautiful-bill-act-law/
[4] Committee for a Responsible Federal Budget. (2021). Budget Update: July 2021. Retrieved from https://crfb.org/thems-budget-monitor/
[5] S&P Global Ratings. (2021). U.S. Economic Outlook: 2021 Midyear Review. Retrieved from https://www.spglobal.com/ratings/en/research/articles/210728-us-economic-outlook-2021-midyear-review-8282147
[6] Office of the United States Trade Representative. (2021). Section 301: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. Retrieved from https://ustr.gov/issues-and-analysis/china-intellectual-property-theft-and-cyber-theft/301-investigations/section-301-chinas-acts-policies
[7] Office of the United States Trade Representative. (2018). Proclamation on Adjusting Tariffs to Promote Free and Fair Trade with respect to Steel and Aluminum Articles. Retrieved from https://www.whitehouse.gov/presidential-actions/proclamation-adjusting-tariffs-promote-free-fair-trade-respect-steel-aluminum-articles/
[8] Moody's Investors Service. (2021). Moody's downgrades U.S. Sovereign Rating to A1 from Aa3; outlook stable. Retrieved from https://www.moodys.com/research/Moodys-downgrades-U-S-Sovereign-Rating-to-A1-from-Aa3--Outlook-Stable--PR_435918
Note: This article is a computer-generated summary based on the provided bullet points and does not contain any advertisements. The article's format follows the Markdown guidelines for readability and structure.
Read also:
- Trade Disputes Escalate: Trump Imposes Tariffs, India Retaliates; threatened boycott ranges from McDonald's, Coca-Cola to iPhones
- Li Auto faces scrutiny after crash test involving i8 model and a truck manufacturer sparks controversy
- Celebrated Title: Cheesemakers Blessed Upon
- Construction and renovation projects in Cham county granted €24.8 million focus on energy efficiency
