S&P reiterates US rating as tariff income expected to offset tax bill damage
By Benjamin Chiou
Date: Tuesday 19 Aug 2025
(Sharecast News) - S&P Global Ratings has said that "meaningful tariff revenues" from Donald Trump's trade war should balance the fiscal damage linked to the president's massive tax and spending bill.
The comments came as the ratings agency kept an AA+ credit rating on the US with a stable outlook.
"Amid the rise in effective tariff rates, we expect meaningful tariff revenue to generally offset weaker fiscal outcomes that might otherwise be associated with the recent fiscal legislation, which contains both cuts and increases in tax and spending," S&P said.
"At this time, it appears that meaningful tariff revenue has the potential to offset the deficit-raising aspects of the recent budget legislation."
Despite concerns that Trump's sweeping tariffs on overseas imports could reignite inflationary pressures and dampen consumer confidence, the ratings agency said that changes in international trade policies "won't weigh on the resilience and diversity of the US economy".
However, it did say that a bipartisan drive to bolster the US fiscal profile by meaningfully cutting deficits and tackling budgetary issues "remains elusive".
"We could lower the rating over the next two to three years if already high deficits increase, reflecting political inability to contain rising spending or to manage revenue implications from changes in the tax code. [...] The ratings could also come under pressure if political developments weigh on the strength of American institutions and the effectiveness of long-term policymaking or independence of the Federal Reserve," S&P said.
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