S&P holds U.S. credit rating steady, saying tariff revenue will offset weaker finances

The recent assessment by S&P Global Ratings reaffirming the AA+ credit rating for the U.S. has sparked discussions about the nation’s fiscal health. The agency highlighted the positive impact of new revenue generated by the Trump administration’s tariffs, which will help offset the tax cuts authorized by the Republicans’ One Big Beautiful Bill Act.

The credit ratings agency maintained its AA+/A-1+ rating with a stable outlook, emphasizing the resiliency of the nation’s economy despite various economic concerns. S&P pointed out the impact of new tax cuts against the backdrop of high U.S. debt and deficits but noted that the revenue from tariffs is expected to balance out these fiscal challenges.

The report highlighted the wealth, diversity, and resilience of the U.S. economy, with a per capita GDP projected to exceed $89,000 by 2025. It also acknowledged the nation’s strong economic growth compared to its peers since the pandemic.

On the downside, the U.S. economy is currently experiencing a slowdown, with GDP growth decelerating to an average rate of 1.25% in the first half of the year, down from 2.8% in 2024. The job market also struggled in July, with only 73,000 jobs added, falling short of economists’ expectations.

The uncertainty created by the new tariff regime implemented by the Trump administration has led to businesses delaying hiring decisions, contributing to the sluggish job market. However, tariff revenue has surged, with the U.S. government collecting approximately $30 billion from import duties in July, marking a significant increase from the previous year.

While the tariff revenue will strengthen the nation’s finances, economists warn that it comes at a cost to American consumers and businesses. Importers are burdened with tariffs, which are typically passed on to consumers through higher prices. Economists estimate that the average taxpayer could incur an additional $2,700 in costs due to the new import duties in 2026.

In conclusion, while the tariff revenue may provide a financial boost, the overall impact on the economy and consumers remains a topic of debate. The Trump administration’s trade policies and their implications for the U.S. economy continue to be closely monitored by analysts and policymakers.