“We don’t expect the ruling to have a substantial impact on our ratings outlook. Broader policy uncertainty still represents a key risk to the global credit outlook and a potential trigger for market volatility,” it said in a release.
The US Supreme Court’s ruling on President Donald Trump’s tariffs does not end uncertainty, but S&P Global does not expect a substantial impact on its ratings outlook.
Heightened policy uncertainty remains a top risk to global credit conditions.
The ruling combined with the intended Section 122 tariffs do not change the rating agency’s forecast for US GDP and employment growth, and the federal fund rate.
S&P Global Ratings expects the US administration to maintain high tariffs via a mix of sectoral levies through various channels. The exact tariff composition (either higher rates or exemptions) could shift along with policy priorities.
Meanwhile, it is unclear how companies could recoup tariffs already paid. Many are likely to seek refunds in court.
US corporations still face higher import and input costs. As the effects of higher tariffs continue to ripple through supply chains, margin pressures have been uneven and largely depend on companies’ ability to pass through higher costs.
Tariffs have so far had a limited effect on US corporate ratings, with some sectors affected disproportionately.
S&P Global does not expect the court’s ruling to be an inflection point for rating actions.
“More broadly, the [US] administration’s transactional approach, compounded by the upcoming midterm elections, could raise the risk of unexpected policy shifts. This could curb business sentiment and delay investment decisions. Companies may also further adjust supply chains and operating structures in ways that prioritise security and resilience over cost efficiency,” it noted.
Asia-Pacific
The court ruling and subsequent universal tariff could entail a level playing field for exporters in the Asia-Pacific (APAC) to global peers. However, trade dynamics of the region could still change.
China looks to be an early beneficiary. Lower US tariffs on Chinese products may prompt a relatively rapid return of exports—particularly lower value-added goods to the US market, which could provide some support to China’s growth outlook.
Furthermore, the reopening of the US markets could offer some relief to Chinese corporates, which have been hampered by soft consumption and sticky involution, according to S&P Global.
However, those who benefitted from lower tariffs in the earlier round could feel some pain. Australia and Singapore now face a hike to 15 per cent from the original 10 per cent. Particularly for export centric Singapore, the higher trade levy could mean margin compression for producers.
However, a flat 10 per cent/15 per cent universal tariff will mean the region’s exporters have a level playing field with global counterparts, it noted.
Two key risks to credit conditions in Europe remain an unpredictable trade outlook and a geopolitical environment, which is defined by fragmentation, strategic rivalry and the breakdown of cooperation.
The longer-term outlook for the trade relationship between the European Union (EU) and the United States will also consider material divergence in the regulatory stance on sustainability and due-diligence reporting, digital trade and other technical barriers.
Europe also risks getting caught in the crossfire of US-China tensions as they leverage their supply chain dominance in critical goods, causing disruption in related industries, S&P Global added.
The ruling does not immediately affect the rating agency’s macroeconomic projections for emerging markets. Some of these like China and Brazil may enjoy near-term relief from the rescinding of IEEPA tariffs.
This may encourage another round of front-loading exports to the United States, as was the case in the first half of last year. However, uncertainty around future tariffs is high, making any durable trade gains unlikely.
Fibre2Fashion News Desk (DS)
