Fitch: Trump policies could put nation’s credit rating at risk

The United States’s credit rating could be in danger if Donald Trump’s fiscal policies are fully implemented, according to a top credit rater.

Fitch Ratings said Wednesday that if Trump, the president-elect, is able to completely put in place his stated policy plans, it could make it difficult for the U.S. to retain its “AAA” rating.

{mosads}There was no immediate ratings impact to Trump’s stunning win Tuesday night, but the rater cautioned that Trump’s pitch to cut taxes, crack down on trade deals and tighten immigration would weigh on the nation’s overall fiscal health and make the stability of its debt come into question.

“The fiscal impact of the Trump plan would be negative for U.S. sovereign creditworthiness over the medium term, as tax cuts alone cannot generate enough growth to make up for the loss in revenue,” said Fitch.

Trump’s campaign has dismissed outside analysis that his broad tax cut plan would drastically add to the deficit, arguing that a huge increase in economic growth could offset those costs. Fitch said it was “uncertain” whether businesses would drastically boost investment after receiving such a tax cut.

A drastic increase in the deficit could make investors begin to question how reliable it is to expect the U.S. to fully pay back all of its debt, and raters could take steps to lower the nation’s credit reputation if that became a question.

Fitch also said Trump’s vow to crack down on trade deals carries significant economic and political risks.

“A major shift towards trade protectionism through the proposed policies of withdrawal from NAFTA and the imposition of tariffs on China would have significant adverse implications for US investment and growth and push up prices, particularly in the event of foreign counter measures or ‘currency wars,’ ” the rater said. “Such a shift would be vigorously resisted by corporate lobbies and would expose a gulf between the president and the mainstream of Republican legislators.”

The U.S. carries a top credit rating from two of the major three raters — Fitch and Moody’s Investors Service. The nation’s credit rating was downgraded by Standard & Poor’s after the debt limit drama of 2011, which led to some market turmoil in the immediate aftermath.