They are unlikely to impose tariffs at those levels, but if Trump goes ahead, the universal 10% tariff could add up to 1.8 percentage points to inflation, according to the article, triggering a rebound in inflation in the first year, in rather than having a continuous effect, and would affect production by up to one percentage point.
Raising tariffs to 60% on China could add up to 1.2 percentage points to inflation and the hit to production could be around 0.5 percentage points, he added.
S&P said it could lower the U.S. rating, currently AA+, in the next two or three years if political developments weigh on the strength of institutions, endanger the dollar as the world’s main reserve currency, or if the high fiscal deficit increases further.
Current S&P fiscal projections assume the public deficit will be around current levels, he added.
