US Credit Downgrade Turns Spotlight on Fiscal Risks
The US was stripped of its final triple-A credit rating when Moody’s downgraded the nation’s government debt.
The inauguration of Donald Trump as US president has set a new course for America’s economic agenda, potentially reshaping the investment outlook along the way. Soon after returning to the White House, Trump said he might impose a 10% tariff on China and 25% tariffs on imports from Canada and Mexico on February 1, but added that the US is not ready to implement universal tariffs that he is also considering. Trump also said he could spare Europe from tariffs if the region buys more American oil and gas. The remarks boosted hopes among investors that new levies may not come as quickly as feared, potentially allowing time for negotiations. Meanwhile, Trump issued a memorandum saying the US will not enforce a global corporate minimum tax. Updates to domestic tax policy are likely coming as well. Without congressional action, cuts to individual tax rates approved in 2017 are set to roll back automatically.
Trump’s latest comments on trade offer a reminder that both the policy and economic landscape are poised to remain dynamic. While a fast-changing outlook can create new or unexpected implications for financial markets, looking beyond this macro volatility will allow investors to uncover long-term opportunities across asset classes. PGIM’s 2025 Best Ideas report is a collection of opportunities that could be appealing for investors seeking alpha in the current environment.
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