S&P Stands By U.S. Credit Rating, Tariffs Help May Plug Fiscal Gap

 

On Tuesday, Wall Street woke up to news that major credit watchdog S&P Global is sticking with its AA+ rating for the United States, reinforcing market confidence even as fiscal pressures mount. The agency pointed to a robust surge in tariff collections—thanks to the Trump administration's recent trade policies—as a stabilizing fiscal force in the face of sweeping new legislation dubbed the "One Big Beautiful Bill Act," which made permanent tax cuts and opened doors for fresh spending.
This tariff boost isn’t trivial. Customs duties jumped by $21 billion in July, yet the monthly budget shortfall still swelled to nearly $291 billion, a steep rise. Still, S&P sees a silver lining: the tariff windfall is softening the impact of the deficit. In fact, their projections show the deficit easing from 7.5% of GDP in 2024 to around 6% on average from 2025 to 2028—a sign of fiscal pressure gradually easing.
Beyond numbers, S&P’s rating carries a message of cautious optimism: even as inflation stays sticky and global growth slows, that sovereign credit stamp reassures investors that the U.S. remains a reliable borrower. That said, S&P also underscores the balancing act ahead—mustering inflation while keeping markets calm—and suggests that policymakers are walking a fine line as they shape the path forward.