Moody's: "US Fiscal Deficit to Worsen for Years Due to Trump's Tariff Policy"

Pointed Out in the Report on the 25th
Expansion of Budget Deficit and Decrease in Debt Repayment Capacity

International credit rating agency Moody's has warned that the US fiscal deficit will worsen for several years due to President Donald Trump's tariff policies. This is because the budget deficit is expanding and the capacity to repay debt is gradually decreasing.

According to the UK Financial Times (FT), Moody's stated in a report on the 25th (local time) that "the fiscal soundness of the United States will continue to decline for several years" and assessed that "it has already worsened since November 2023."

In November 2023, Moody's maintained the US long-term sovereign credit rating at the highest grade of 'Aaa' but downgraded the rating outlook from 'stable' to 'negative.'

Moody's pointed out that while the US has a 'special' economic resilience and the US dollar plays a central role in the global financial system, the policies of the second Trump administration could be more harmful than beneficial to government finances.

Moody's said, "Sustained high tariffs, tax cuts without alternative revenue sources, and tail risks that, once realized, have significant economic impacts negatively affect credit and weaken the outlook that the strengths of the US economy can handle fiscal deficits or debt."

It added, "In fact, fiscal deterioration is likely to continue even when economic or financial conditions are favorable."

Moody's forecasted, "The US's debt repayment ability is substantially weaker than that of other high-credit rating countries," and "As the US administration's policy agenda on trade, immigration, taxes, federal government spending, and regulation evolves, parts of the US and global economy may be reorganized, potentially causing significant long-term consequences."