S&P Global Confirms US Creditworthiness

S&P Global confirmed the creditworthiness of the United States as "AA+" on Monday, stating that the income generated from President Donald Trump’s tariffs will compensate for the tax hit from his massive tax and expenditure account.

Trump’s Tax Cuts and Tariffs

Trump signed the tax bill into law in July after it was adopted by the Republican Congress. The tax cuts, which were introduced in 2017, permanently altered the legislative template, providing new tax reliefs. According to S&P, "meaningful tariffs generally will compensate for weaker fiscal results, which may otherwise be associated with the latest tax legislation, which contains both cuts and increases in tax."

Impact of Tariffs on the US Economy

In July, the United States reported an increase in customs bills of $21 billion from Trump’s tariffs, but the state budget deficit still rose by almost 20% to $291 billion in the same month. The interest on public debts continued to grow, reaching $1.013 trillion in the first 10 months of the financial year, an increase of $57 billion over the previous year due to higher interest rates and increased debts.

Global Trade War and Tariffs

Since his return to power in January, Trump has introduced a global trade war with a number of tariffs that have been imposed on individual products and countries. The Republican President has set a basic tariff of 10% for all imports to the United States, as well as additional tasks to some objects and trading partners.

Effects of Tariffs and Credit Rating

S&P, which was the first rating agency to lower the US government’s flawless credit rating in 2011, said the view of the US rating remains stable. The rating agency expects the Federal Reserve to navigate the challenges of reducing domestic inflation and combating weaknesses in the financial market.

Future Projections and Credit Rating

The country’s general government deficit is predicted to average 6.0% of GDP in the period 2025-2028, compared to 7.5% in 2024 and an average 9.8% of GDP in 2020-2023. S&P said it could reduce the rating in the next two to three years if the already high deficits continue. However, the US credit rating could increase if there is continuing economic growth and adjustments to the US financial profile, which would reduce the latest increases in the country’s debt burden.

Market Response and Expert Opinion

On Tuesday, there was no response to the markets of the Credit Rating Affirmation of S&P. James Ragan, Co-Chief Investment Officer and Director of Investment Management Research, said that the S&P rating was recognition of the sensible tariff income generated so far. "These are all good income, but that’s also a strain on the economy, so I think that we do not know the effects in the future," he said. The US state debt burden rose last week to a record of 37 trillion dollars.