What do you know? Buried at the bottom of the financial news today is notice that S&P Global Ratings has affirmed the U.S.’ credit ratings, saying it expects strong revenues from Trump’s tariff program to help offset income lost because of the Big Beautiful Bill and lower taxes.
S&P Gives Trump’s Tariffs a Rare Thumbs-up 👍 https://t.co/IkSScYG98v pic.twitter.com/qSW0m44H4y
— Liz Peek (@lizpeek) August 19, 2025
We can (unofficially) designate this as the first time any financial institution has acknowledged that there is an upside to President Trump’s trade battle. Naturally, the news did not get much play. You can imagine what hysteria would have greeted a credit downgrade from S&P.
Actually, you don’t need to imagine it. In May, when Moody’s lowered the ratings on U.S. sovereign debt, the last of the Big Three ratings agencies to do so, this was the headline from the NY Times: “U.S. Downgraded by Moody’s as Trump Pushes Costly Tax Cuts.”
You see, it wasn’t that Joe Biden kept spending at irresponsible levels equivalent to unprecedented outlays made during World War II, even as the economy recovered from Covid. No, it was all about keeping the 2017 tax cuts in place – that was the real culprit. BTW, this isn’t true; tax revenues are close to their 50-year averages compared to GDP while spending is way too high compared to historical norms.
Specifically, S&P said about its current decision, “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.”
Forgive me, but this should have earned banner headlines. Our financial press has done nothing but throw shade on Trump’s tariffs. Their negativity, as I recently wrote, is in part because their only historical reference point is 1930 and the imposition of the Smoot-Hawley tariffs, which caused a collapse in global trade and almost certainly helped prolong the Great Depression.
Today’s situation is vastly different, in that the U.S. in 1930 enjoyed a trade surplus with the rest of the world; we now have a $1.2 trillion trade deficit. We are also, with a consumer economy of $20 trillion, by far the biggest game in town. EU consumer spending amounts to $10 trillion, and China follows at $8 trillion. President Trump is taking advantage of that clout by trying to level the trade playing field and imposing tariffs. Here’s my Hill piece for those interested.
S&P also wrote in a statement: “This incorporates our view that changes under way in domestic and international policies won’t weigh on the resilience and diversity of the U.S. economy. And, in turn, broad revenue buoyancy, including robust tariff income, will offset any fiscal slippage from tax cuts and spending increases.”
In other words, the economy is doing just fine, even with the tariffs, while the income is a major offset to the fiscal imbalances that over the long-term threaten our country.
The Wall Street Journal, not content with downplaying the news, added: “The assessment comes despite concerns that the implementation of tariffs could put a brake on business confidence and economic growth while spurring inflation and slowing hiring.”
That is not S&P’s “assessment”; that is editorializing from the WSJ.
I wrote in that Hill piece that nobody knows how the tariff battle will spin out over time; Trump’s approach has never been tried before. But, if increased duties help stabilize the deficits that were inflated by the reckless spending of Joe Biden, and if tariffs attract manufacturing and employment to our shores, it will be a great victory. That is something Trump’s critics cannot imagine, and certainly a development they will not celebrate.
