This downgrade comes at a critical juncture as the 30 year long bond is due next year. This downgrade, coupled with damaged credibility due to the tariffs, may result in sovereigns reducing their holdings of US treasuries. Although one might argue not any individual country holds a significant portion of the 36trln debt, the combined amount plus the current administration desire to add additional 3.3trln spending, could mean a 25% (= US$10trln) gap to fill. So while Trump again talking about going back to reciprocal tariffs if no deal is reached, his aides are certainly not doing their job in properly assessing the final outcome.
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