US government finances – tariffs and savings will not rescue the day
Congress is currently negotiating a major fiscal package that would further inflate the US deficit in the coming years.
Bernd Weidensteiner, Dr Christoph Balz
Commerzbank Economic Research
05/19/2025
This would cause the debt ratio to rise sharply and call into question the long-term sustainability of US public finances. At the same time, the rating agency Moody's has downgraded the credit rating of the US. We analyze the extent to which tariff increases and spending cuts can improve the financial situation.
The baseline is already worrying...
Based on current law, the Congressional Budget Office (CBO) estimates that the US federal government's deficit will average around 6% of GDP over the next ten years, meaning that it will not decrease significantly.
The debt ratio will exceed the high of 106% of GDP reached at the end of World War II in just a few years and will be almost 119% of GDP in 2035.
For full text see attached PDF-Version.
