U.S. President Donald Trump presents a sweeping spending and tax legislation, known as the “One Big Beautiful Bill Act,” after he signed it, at the White House in Washington, D.C., U.S., July 4, 2025.
Leah Millis | Reuters
S&P Global said it expects “meaningful” federal government revenue from President Donald Trump’s broad tariff policies to “generally offset weaker” revenue expected from Trump’s recently enacted major tax-and-spending bill.
S&P Global cited that outlook on Monday as it maintained its AA+ rating on long-term U.S. sovereign debt and its A-1+ rating on “short-term unsolicited sovereign credit.”
But the company warned, “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.”
It also cautioned that the ratings could “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.”
“This, in turn, could jeopardize the dollar’s status as the world’s leading reserve currency–a key credit strength,” S&P Global said.
Trump has imposed wide-ranging and often high tariffs on imports from other countries since regaining the White House in January.
In July, Trump’s so-called “Big Beautiful Bill” became law. The legislation imposes cuts to federal government spending, while also cutting tax rates.
On July 21, the Congressional Budget Office estimated that the law will result in a net increase in the federal budget deficit of $3.4 trillion from 2025 through 2034.
“That increase in the deficit is estimated to result from a decrease in direct spending of $1.1 trillion and a decrease in revenues of $4.5 trillion,” the CBO said at the time.
On Monday, S&P Global said, “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.”
Last week, the Treasury Department said that in July, there was a nearly $21 billion increase in U.S. customs duty collections as a result of Trump’s tariff policy. However, the federal budget deficit grew by almost 20% for the same month, according to the department.
But S&P Global said its “outlook remains stable, reflecting our expectation of continued resilience in the U.S. economy; credible, effective monetary policy execution; high, but not rising, fiscal deficits that underpin the increase in net general government debt; and the $5 trillion increase in the debt ceiling.”
“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 said.
“This incorporates our view that changes underway in domestic and international policies won’t weigh on the resilience and diversity of the U.S. economy,” the company said.
“And, in turn, broad revenue buoyancy, including robust tariff income, will offset any fiscal slippage from tax cuts and spending increases.”
