The rating agency S&P has confirmed the creditworthiness of the United States – a success of its tariffs for Trump. But in the long term, his plan could fail and the United States headed for a debt crisis.
The rating agency S&P keeps the creditworthiness of the United States stable despite increasing debts and growing deficits. The creditworthiness guards confirmed the second best grade “AA+” last night. As a reason, they explicitly referred to the tariffs introduced by President Donald Trump. These washed billions into the state treasury and are likely to compensate for the financial burdens from his latest tax and expenditure law, the “One Big Beautiful Bill Act”.
Experts warn of rising US debts
As positive as this message may be for Trump: Not all experts share the assessment of S&P. The competing rating agency Moody’s had already downgraded the US credit rating in May, referring to increasing debt.
Many economists continue to see a risky balancing act in Trump’s economic policy. In the short term, Trump’s politics may stabilize the state finances of the United States – but in the long term, he could drive the country into a debt and financial crisis.
Trump relies on tariffs instead of saving
Since his return to the White House in January, Trump has started a global trade dispute: ten percent inches on all imports, as well as numerous special levies depending on the country and industry. The result: In July alone, the US customs revenue climbed by $ 21 billion.
However, the government’s budget deficit rose by almost 20 percent to $ 291 billion in the same month. The absolute public debt floats by around $ 700 billion – as much as it has been in years – and was therefore $ 36.92 trillion at the end of July. As of today, according to the “US Debt Clock” it is already around $ 37.25 trillion.
USA in top ten countries with the highest Public debt
The tax and expenditure law celebrated by Trump as “One Big Beautiful Bill Act” (OBBBA) should dramatically tighten the financial situation of the United States in the coming years. According to estimates of the congressional budget office, it costs $ 2.4 trillion until 2034. For Trump, this is an economic stimulus program – a financial -political Ascension Command for critics.
Especially since the US’s debt ratio in relation to gross domestic product is already over 123 percent. This is enough to take place in the ranking of the countries with the highest public debt.
For comparison: In 2000, the US debt ratio was still 56.58 percent. With it, she has more than doubled. If this trend continues, the United States is heading for a financial disaster.
Woe when the debt rate increases over 200 percent
According to the Penn Wharton Budget Model from the University of Pennsylvania, the US debt ratio should not increase over 200 percent. From this point on, neither tax increases nor outputs could be bankrupted nor prevent a state. The researchers estimated the time window for corrections at the time of publication in 2023 to 20 years.
This shows that the high state debt of the United States is by no means alone Trump’s fault. His predecessors had already caused the quota to swell with their spending policy.
US budget deficit should swell rapidly
But the fact is: Trump’s Obbba is likely to expand the underfunding of the state budget in the coming years. According to estimates of the Committee for a Responsible Federal Budget, the budget deficit will be $ 5.5 trillion higher, according to the Committee for a Responsible Federal Budget.
As early as the current budget year 2025, the Congressional Budget Office predicts a deficit of 6.2 percent of GDP. For comparison: In Germany, the budget deficit in the current year is likely to be 2.7 percent.
In the USA, debt service is becoming increasingly expensive for the USA
According to the Penn Wharton Budget Model, it becomes critical if interest rates are permanently above economic growth. Then the debts could become “dynamically unstable”. In other words: In this case, the risk of a financial crisis would increase drastically.
The return of ten -year government bonds is currently around 4.3 percent. For comparison: five years ago it was even less than 1.0 percent. For the United States, it is becoming increasingly expensive to get money from your creditors at the financial markets.
Does Trump overflow the barrel?
Experts agree: The high US state debt is certainly not Trump’s fault. But the US President and his economic policy could be the proverbial drop that causes the barrel to overflow- and the USA to the brink of a debt and financial crisis.
In the short term, customs income may support the budget situation; In the long term, given the “One Big Beautiful Bill Act” there is a threat of a vicious circle of rising debts, attractive interest rates and falling trust in the financial markets. Investors are still loyal to the United States, also because there is simply no comparable and liquid market for government bonds. But the crucial question remains: how long?
Also Rating agencies can be wrong – see financial crisis
Anyone looking for answers should not rely blindly to the judgment of the rating agencies, this shows a look at the history books. S&P only withdrawn the top grade “AAA” to the USA in 2011 – and thus more than three years after the outbreak of the financial crisis. In their projections, they calculated by around two trillion dollars.
At that time, many economists accused the creditworthy of the creditworthy of reacting too late. S&P has long beautified the creditworthiness of the USA, although the high debt and the increasing budget deficit in view of trillion -heavy banking and economic programs had previously offered a lot of reason to reduce the grade.
