S&P Global to Revise World Economic Forecasts After U.S. Tariff Surprise

S&P Global has announced a full review of its economic forecasts following the introduction of wide-ranging U.S. trade tariffs. The unexpected scale of the new measures, rolled out under President Donald Trump, has raised concerns over slower growth and the risk of more credit rating downgrades.

The agency, responsible for assessing the financial health of more than 130 countries and thousands of companies, stated that the size and scope of the tariffs went beyond initial assumptions. Revised projections are expected next week, with early estimates pointing to a rise in U.S. inflation nearing 4% by year-end—up from the previously forecast 3%.

The actual effect on U.S. economic output will largely depend on how other countries respond and how the U.S. government uses the tariff income. If the funds are directed toward tax cuts, it could slightly cushion the economic slowdown. Still, even with mild retaliation from trading partners, S&P expects U.S. GDP growth to be reduced by 0.3 to 0.4 percentage points from its earlier outlook.

While the agency does not currently predict a formal recession in the next 12 months, it has raised the chances of one occurring to between 30% and 35%, compared to 25% in March.

Outside the U.S., growth forecasts are also likely to be revised. Economies like the eurozone and China may see small changes of around a quarter percentage point annually. In contrast, nations with strong trade ties to the U.S.—including Ireland, Switzerland, and several Asia-Pacific economies—could face steeper reductions in expected growth.

Although S&P has not yet issued any credit rating changes, financial markets are already reacting. Insurance costs on debt have climbed for countries and companies considered more exposed to trade disruptions, and other ratings firms have already made moves.

S&P noted that countries impacted by the tariffs may respond in different ways. Some are expected to apply targeted actions aimed at specific U.S. sectors and politically significant regions, rather than using sweeping tariff policies. Others might adopt restrictions through regulatory or service-based measures.

These actions, the agency warned, could place added pressure on economic performance around the world, especially in regions with strong trade links to the U.S.

Also Read: Trump’s New Tariffs: Which Countries and Industries Will Be Affected Most?