Microvast Holdings announces departure of chief financial officer
Investing.com -- S&P Global, the credit ratings firm, has announced it will review all its macroeconomic forecasts following the introduction of sweeping world trade tariffs by U.S. President Donald Trump this week. This move could potentially lead to a fresh wave of credit score downgrades.
The company, which evaluates the creditworthiness of thousands of companies and over 130 countries, stated that the extent and magnitude of Trump’s new tariffs have surpassed most predictions. S&P Global plans to release its revised forecasts next week. Initial assumptions indicate a surge in U.S. inflation, bringing it closer to 4% by year-end, compared to the previously anticipated 3%.
The effect of these tariffs on U.S. GDP will hinge on the extent of retaliation from its trade partners and the allocation of tariff revenues, particularly if they are used to fund tax cuts, according to S&P Global. Even in a scenario where tax cuts are implemented and retaliation is relatively modest, GDP growth is still expected to be three-tenths to four-tenths of a percentage point lower than S&P’s most recent forecasts.
S&P Global analysts mentioned in a report, "We still don’t see a NBER-defined recession (depth, duration, and broad dispersion of weakness, not just two consecutive quarters of negative growth) in the next 12 months." They added that the subjective probability of a recession within that time frame has likely increased to 30%-35% from 25% in March.
Growth forecasts for the rest of the world are also expected to be reduced. Larger economies like the euro zone and China may see smaller adjustments, around one quarter of a percentage point per year, while more open economies that heavily trade with the U.S. may see larger revisions. This applies particularly to Ireland and Switzerland in Europe and the Tiger economies in Asia-Pacific, as stated by S&P Global.
While S&P Global did not provide any rating move predictions, Fitch, a peer company, downgraded China’s rating on Thursday. Debt insurance costs have already increased for firms and countries perceived as vulnerable, based on the assumption of a wave of downgrades.
In response to the tariff moves, S&P Global analysts predict that other countries will adopt various strategies. Some might target perceived vulnerable U.S. industries and political districts rather than imposing blanket tariffs, while others could employ non-tariff measures and measures impacting services and goods flows. S&P Global noted that these potential countermeasures could exert further downward pressure on growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.