S&P Global has reaffirmed the ‘AA+’ credit rating for the U.S. The decision is largely based on the anticipated tariff revenue that is expected to counterbalance the fiscal impact of President Donald Trump‘s latest tax-cut and spending bill.
S&P Sees Stable Outlook Despite Trump's Costly Tax Bill
The ratings agency cited the revenue generated from Trump tariffs as a counterweight to the fiscal implications of his recent tax-cut and spending bill, dubbed the ‘One Big Beautiful Bill Act’, as reported by The Wall Street Journal.
The bill, enacted in July, introduced new tax breaks and made Trump’s 2017 tax cuts permanent. “We expect meaningful tariff revenue to generally offset weaker fiscal outcomes that might otherwise be associated with the recent fiscal legislation,” S&P stated.
Despite a $21 billion boost in customs duty revenues from Trump's tariffs in July, the federal budget deficit still rose nearly 20% that month, reaching $291 billion. Since taking office in January, Trump has ignited a global trade war by imposing a series of tariffs on specific products and countries.
S&P affirms a stable outlook for the U.S. credit rating, expressing confidence that the Federal Reserve will manage inflation and financial market risks effectively. The agency projects the general government deficit to average 6.0% of GDP between 2025 and 2028, down from 7.5% in 2024 and an average of 9.8% during 2020–2023.
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Credit Risk Remains Amid Political Events, Tariff Reversal Talks
However, S&P warned that the ratings may come under pressure if political events undermine the resilience of U.S. institutions, the credibility of long-term policymaking, or the Federal Reserve's independence.
Prior to the approval of Trump’s ‘One Big Beautiful Bill’, Rep. Thomas Massie (R-Ky.) had warned that the passage of the bill could potentially plunge the U.S. credit rating to BBB status, a level that typically indicates financial distress.
Furthermore, Moody’s stripped the U.S. of its final AAA credit rating amid rising fiscal deficits and ballooning interest expenses. President Trump has also warned of a potential economic fallout if his extensive tariff policy is overturned, hinting at a new Great Depression.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
