Economy / Envato Market
by Emmitt Barry, with reporting from Washington D.C. Bureau Staff
WASHINGTON D.C. (Worthy News) – S&P Global Ratings said Monday it expects federal revenue from President Donald Trump’s sweeping tariff policies to help offset weaker revenues caused by his recently enacted tax-and-spending package, maintaining the United States’ long-term AA+ sovereign debt rating and short-term A-1+ rating.
The announcement comes just weeks after the Congressional Budget Office (CBO) projected that Trump’s so-called “Big Beautiful Bill” will add $3.4 trillion to the federal deficit over the next decade, driven largely by deep tax cuts and reduced government revenues.
Despite the warning signs, S&P said its outlook on U.S. credit remains stable, pointing to the resilience of the American economy and the expectation that tariff revenues will continue to bolster federal finances.
Tariffs vs. Deficits
Trump has leaned heavily on tariffs since returning to the White House in January, imposing sweeping duties on imports from multiple countries. Last month, the Treasury Department reported a $21 billion year-over-year increase in U.S. customs duty collections, directly tied to Trump’s trade measures.
Still, the federal budget deficit jumped nearly 20% in July, underscoring the pressure from tax and spending changes.
“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,” S&P Global said in its report.
Credit Outlook and Risks
S&P warned it could lower the rating in the coming years if deficits continue to climb without political restraint, or if U.S. institutions–including the Federal Reserve–are weakened. Such developments could even threaten the dollar’s status as the world’s leading reserve currency, the agency noted.
Nonetheless, the firm said it does not project a “persistent deterioration” of U.S. finances, even though the national debt is expected to surpass 100% of GDP within three years. S&P forecasts that government deficits will average 6% of GDP from 2025 to 2028, compared with 7.5% last year.
Treasury’s Projection
Treasury Secretary Scott Bessent recently revised his tariff revenue estimate, saying collections this year could exceed 1% of GDP, well above his earlier projection of $300 billion.
“The stable outlook indicates our expectation that although fiscal deficit outcomes won’t meaningfully improve, we don’t project a persistent deterioration over the next several years,” S&P concluded.
The U.S. has held its AA+ credit rating since 2011, when Standard & Poor’s issued an unprecedented downgrade from AAA amid debt ceiling disputes.
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