S&P Global Ratings maintained the United States’ AA+ credit rating, noting that projected tariff revenues from the White House’s trade agenda could contribute meaningfully to federal income. However, the assessment emphasized that the nation’s fiscal stability persists despite, rather than because of, current policy directions. While the administration claims economic gains from import levies, S&P’s analysis warns of significant broader economic costs. The anticipated surge in growth and rapid narrowing of the budget shortfall appear increasingly unrealistic, according to the report. Although credit ratings agencies sometimes lag market signals, their impartial evaluations carry weight, especially when contrasted with politically influenced commentary. The conclusion suggests that short-term revenue boosts are outweighed by long-term risks to economic balance and public debt sustainability.
— news from Bloomberg.com
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S&P Exposed the Folly of the White House’s Economic Plan
President Donald Trump took to social mediaBloomberg Terminal Tuesday to tout the news that S&P Global Ratings had reaffirmed America’s AA+ rating, citing the “meaningful tariff revenue” likely to be raised by the White House’s aggressive trade policies. It seems he didn’t read the rest of the report, which makes clear that the country’s creditworthiness is safe for now in spite of the president’s best efforts, not because of them. n nCredit ratings should always be taken with a grain of salt. The firms responsible for assessing a borrower’s ability to repay its debts are often well behind the market. But they’re still worth heeding, mostly because their objectivity sets them apart from those firms and economists that may have an agenda when criticizing the government policies. In that sense, what’s clear from S&P’s report is that while the Trump administration may be having some early success in raising much-needed revenue by imposing tariffs on goods coming into the country, the cost to the rest of the economy is severe, with the promises of supercharged growth and a quick reduction in the budget deficit a seeming fantasy.