Credit rating group Moody’s has warned on the US fiscal outlook, saying President Donald Trump’s trade tariffs could hamper the country’s ability to cope with a growing debt pile and higher interest rates.
The rating agency said on Tuesday that America’s “fiscal strength is on course for a continued multiyear decline”, having already “deteriorated further” since it assigned a negative outlook to America’s top-notch triple A credit rating in November 2023.
While Moody’s highlighted the “extraordinary” economic resilience of the US and the role of the dollar and the Treasury market as backbones of the global financial system, its analysts also warned on Tuesday that the policies of the second Trump administration — including sweeping tariffs and plans for tax cuts — could do more harm than good for government revenues.
“The potential negative credit impact of sustained high tariffs, unfunded tax cuts and significant tail risks to the economy have diminished prospects that these formidable strengths will continue to offset widening fiscal deficits and declining debt affordability,” Moody’s said.
Moody’s warns on deteriorating outlook for US public finances https://t.co/xE1wjdoa8u
— Financial Times (@FT) March 25, 2025
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