Moody’s strips US government of top credit rating

Moody’s Ratings has stripped the United States government of its top credit rating, citing successive governments’ failure to stop a rising tide of debt, a surprise move that could complicate President Donald Trump’s efforts to cut taxes and send ripples through global markets.

On Friday, Moody’s lowered the rating from a gold-standard Aaa to Aa1. “Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” it said as it changed its outlook on the US to “stable” from “negative”.

But, it added, the US “retains exceptional credit strengths such as the size, resilience and dynamism of its economy and the role of the US dollar as global reserve currency.”

Moody’s is the last of the three major rating agencies to lower the federal government’s credit rating. Standard & Poor’s downgraded federal debt in 2011, and Fitch Ratings followed in 2023.

In a statement, Moody’s said, “We expect federal deficits to widen, reaching nearly 9 percent of [the US economy] by 2035, up from 6.4 percent in 2024, driven mainly by increased interest payments on debt, rising entitlement spending, and relatively low revenue generation.’’

Extending President Donald Trump’s 2017 tax cuts, a priority of the Republican-controlled Congress, Moody’s said, would add $4 trillion over the next decade to the federal primary deficit, which does not include interest payments.

White House communications director Steven Cheung reacted to the downgrade via a social media post, singling out Moody’s economist, Mark Zandi, for criticism. He called Zandi a political opponent of Trump.

“Nobody takes his ‘analysis’ seriously. He has been proven wrong time and time again,” Cheung said.

Stephen Moore, former senior economic adviser to Trump and an economist at Heritage Foundation, called the move “outrageous”.

“If a US-backed government bond isn’t triple A-asset, then what is?” he told Reuters.

The Department of the Treasury did not immediately respond to a request for comment from the Reuters news agency.

Bond market rout concerns

A gridlocked political system has been unable to tackle the huge deficits that the US has accumulated. Republicans reject tax increases, and Democrats are reluctant to cut spending.

On Friday, House Republicans failed to push a big package of tax breaks and spending cuts through the Budget Committee. A small group of hard-right Republican lawmakers, insisting on steeper cuts to Medicaid and President Joe Biden’s green energy tax breaks, joined all Democrats in opposing it – a rare political setback for the Republican president.

Since his return to the White House on January 20, Trump has said he would balance the budget while his Treasury Secretary, Scott Bessent, has repeatedly said the current administration aims to lower US government funding costs.

Trump’s attempts to cut spending through Elon Musk’s Department of Government Efficiency have fallen far short of its initial goals. And attempts to raise revenue through tariffs have sparked concerns about a trade war and global slowdown, roiling markets.

Left unchecked, such worries could trigger a bond market rout and hinder the administration’s ability to pursue its agenda.

The downgrade, which came after market close, sent yields on Treasury bonds higher, and analysts said it could give investors a pause when markets re-open for regular trading on Monday.

US Supreme Court blocks the Trump administration’s use of Alien Enemies Act

The United States Supreme Court has granted an emergency petition from a group of migrants in Texas, barring the use of an 18th-century wartime law to expedite their removals.

Friday’s unsigned decision (PDF) is yet another blow to the administration of President Donald Trump, who has sought to use the Alien Enemies Act of 1798 to swiftly deport undocumented immigrants out of the US.

Only two conservative justices dissented: Clarence Thomas and Samuel Alito.

While the high court has yet to rule on the merits of Trump’s use of the Alien Enemies Act, it did issue “injunctive relief” to Venezuelan migrants faced with expulsion under the centuries-old law.

“We have long held that ‘no person shall be’ removed from the United States ‘without opportunity, at some time, to be heard’,” the court majority wrote in its ruling.

It reaffirmed a previous opinion that migrants in the US are entitled to due process – in other words, they are entitled to a fair hearing in the judicial system – before their deportation.

Friday’s case was brought by two unnamed migrants from Venezuela, identified only by initials. They are being held in a detention centre in north Texas as they face deportation.

The Trump administration has accused them, and others from Venezuela, of being members of the Tren de Aragua gang. It has further sought to paint undocumented migration into the US as an “invasion” and link Tren de Aragua’s activities in the US to the Venezuelan government, an assertion that a recently declassified intelligence memo disputes.

That, the Trump administration has argued, justifies its use of the Alien Enemies Act, which has only been used three times prior in US history – and only during periods of war.

But Trump’s use of the Alien Enemies Act has spurred a legal backlash, with several US district courts hearing petitions from migrants fearing expulsion under the law.

Multiple judges have barred the law’s use for expedited removals. But one judge in Pennsylvania ruled the Trump administration could deploy the law – provided it offer appropriate notice to those facing deportation. She suggested 21 days.

The Supreme Court on Friday did not weigh in on whether Trump’s use of the law was merited. Instead, its ruling – 24 pages in total, including a dissent – hewed closely to the issue of whether the Venezuelans in question deserved relief from their imminent deportation under the law.

The majority of the nine-justice bench noted that “evidence” it had seen in the case suggested “the Government had in fact taken steps on the afternoon of April 18” to invoke the Alien Enemies Act, even transporting the migrants “from their detention facility to an airport and later returning them”.

The justices asserted that they had a right to weigh in on the case, in order to prevent “irreparable harm” to the migrants and assert their jurisdiction in the case. Otherwise, they pointed out a deportation could put the migrants beyond their reach.

Justice Brett Kavanaugh went a step further in a separate opinion, calling on the Supreme Court to issue a final and binding ruling in the matter, rather than simply grant this one petition.

“The circumstances call for a prompt and final resolution, which likely can be provided only by this Court,” he said, agreeing with the majority’s decision.

Thomas and Alito, in their dissent, argued the Supreme Court had not afforded enough time to a lower court to rule on the emergency petition.

In the aftermath of the ruling, Trump lashed out on Truth Social, portraying the Supreme Court’s majority as overly lax towards migrants.

“THE SUPREME COURT WON’T ALLOW US TO GET CRIMINALS OUT OF OUR COUNTRY!” Trump wrote in the first of two consecutive posts.

In the second, he called Friday’s decision the mark of a “bad and dangerous day in America”. He complained that affirming the right to due process would result in “a long, protracted, and expensive Legal Process, one that will take, possibly, many years for each person”.

He also argued that the high court was preventing him from exercising his executive authority.

“The Supreme Court of the United States is not allowing me to do what I was elected to do,” he wrote, imagining a circumstance where extended deportation hearings would lead to “bedlam” in the US.

His administration has long accused the courts of interference in his agenda. But critics have warned that Trump’s actions – particularly, alleged efforts to ignore court orders – are eroding the US’s constitutional system of checks and balances.

In a statement after the ruling, the American Civil Liberties Union (ACLU) praised the court’s decision as a bulwark against human rights abuses.

“The court’s decision to stay removals is a powerful rebuke to the government’s attempt to hurry people away to a Gulag-type prison in El Salvador,” said Lee Gelernt, deputy director of the ACLU’s Immigrants’ Rights Project.

“The use of a wartime authority during peacetime, without even affording due process, raises issues of profound importance.”

The Supreme Court currently boasts a conservative supermajority, with six right-leaning judges and three left-leaning ones.

Has Donald Trump taken US-Gulf relations to a new era?

US President Donald Trump has concluded his three-nation tour of the Gulf region.

More than a trillion dollars worth of investments were pledged during the US president’s visit to Saudi Arabia, Qatar and the United Arab Emirates this week.

The US is preparing to lift decades-long sanctions on Syria, and could be close to a nuclear deal with Iran.

Previous US presidents might have been expected to make a stop in Egypt, Jordan or Israel.

But notably Trump’s deal-making tour did not include those countries.

So, are the Gulf nations now in sync with the US on some of the biggest challenges in the region?

And is Trump re-shaping the Middle East or is it the Gulf states that will dictate future US foreign policy?

Presenter: Dareen Abughaida

Guests:

Giorgio Cafiero – CEO at Gulf State Analytics, a geopolitical risk consultancy

Hassan Barari – Professor of international affairs at Qatar University

European leaders consult Trump to align response to Russia-Ukraine talks

European leaders have agreed to step up joint action against Russia over its failure to agree to a ceasefire with Ukraine at a meeting on Friday, British Prime Minister Keir Starmer said, following talks with United States President Donald Trump.

As the Russia-Ukraine talks concluded in Istanbul on Friday, Starmer and fellow leaders from France, Germany and Poland – together with Ukrainian President Volodymyr Zelenskyy – called the US president from a summit in Albania to discuss “developments” in the negotiations, Starmer said.

The talks in Istanbul were the first direct talks between officials from the rwo sides for more than three years. They lasted less than two hours, and the sides agreed to the biggest prisoner exchange since the start of the war in 2022, but failed to make a major breakthrough on a ceasefire.

“We just had a meeting with President Zelenskyy and then a phone call with President Trump to discuss the developments in the negotiations today,” Starmer said from Albania’s capital, Tirana, where leaders of dozens of European countries were gathered for the European Political Community summit.

“And the Russian position is clearly unacceptable, and not for the first time.

“So as a result of that meeting with President Zelenskyy and that call with President Trump, we are now closely aligning our responses and will continue to do so.”

French President Emmanuel Macron told reporters that if Putin continued to reject a ceasefire, “we will need to have a response and therefore escalate sanctions”, which, he said, were being “reworked” by European nations and the US.

EU eyes Russia’s shadow fleet

Macron said it was too early to provide details on the “reworked” sanctions, but European Commission President Ursula von der Leyen has pledged to “increase the pressure”.

She said on Friday that the measures would target the shadow fleet of ageing cargo vessels that Russia is using to bypass international sanctions and the Nord Stream pipeline consortium. Russia’s financial sector would also be targeted.

Earlier, Zelenskyy had said that Ukraine was committed to ending the war, but urged the European leaders to ramp up sanctions “against Russia’s energy sector and banks” if Putin continued to drag his feet in talks.

‘I cannot stand by’: Former ambassador denounces Ukraine shift under Trump

A recent United States ambassador to Ukraine has published an opinion column explaining her decision to resign her post, and criticising President Donald Trump for siding with Russia over Ukraine.

On Friday, former diplomat Bridget Brink published an article in the Detroit Free Press, a newspaper in her home state of Michigan, expressing concern about current US foreign policy.

The US has long been an ally of Ukraine, and since 2014, it has provided the war-torn country with military assistance, as it fends off Russia’s attempts at invasion and annexation.

But Brink wrote that there has been a shift since President Trump returned to office for a second term in January.

“I respect the president’s right and responsibility to determine U.S. foreign policy,” she wrote.

“Unfortunately, the policy since the beginning of the Trump administration has been to put pressure on the victim, Ukraine, rather than on the aggressor, Russia.”

Brink pointed out that her time at the US Department of State included roles under five presidents, both Democrat and Republican. But she said the shift under the Trump administration forced her to abandon her ambassadorship to Ukraine, a position she held from 2022 until last month.

“I cannot stand by while a country is invaded, a democracy bombarded, and children killed with impunity,” she said of the situation in Ukraine.

“I believe that the only way to secure U.S. interests is to stand up for democracies and to stand against autocrats. Peace at any price is not peace at all ― it is appeasement.”

Brink’s position as ambassador has spanned much of the current conflict in Ukraine. After annexing Crimea and occupying other Ukrainian territories starting in 2014, Russia launched a full-scale invasion of the country in February 2022. Brink assumed her post that May.

But the slow-grinding war in Ukraine has cost thousands of lives and displaced many more. While campaigning for re-election in 2024, Trump blamed the war’s eruption on the “weak” foreign policy of his predecessor, Democrat Joe Biden.

He also pledged to end the war on his first day back in office, if re-elected. “I’ll have that done in 24 hours. I’ll have it done,” Trump told one CNN town hall in 2023.

Since taking office, however, Trump has walked back those comments, calling them an “exaggeration” in an interview with Time Magazine.

Still, his administration has pushed Ukraine and Russia to engage in peace talks, as part of an effort to end the war. How those negotiations have unfolded under Trump, however, has been the source of scrutiny and debate.

Ukraine and its European allies have accused Trump of sidelining their interests in favour of his one-on-one negotiations with Russian President Vladimir Putin. They also have criticised Trump and his officials for seeming to offer Russia concessions even before the negotiations officially began.

On February 12, for instance, his Defense Secretary Pete Hegseth told an international defence group in Brussels that Ukraine may never regain some of its occupied territory.

“We must start by recognising that returning to Ukraine’s pre-2014 borders is an unrealistic objective,” he said, adding that membership in the NATO military alliance was also unlikely. “Chasing this illusionary goal will only prolong the war and cause more suffering.”

Trump has gone so far as to blame Ukraine’s NATO ambitions as the cause of the war, something critics blast as a Kremlin talking point.

Amid the negotiations, the relationship between Trump and Ukrainian President Volodymyr Zelenskyy has grown increasingly testy. Already, during his first term, Trump faced impeachment proceedings over an alleged attempt to pressure Zelenskyy by withholding military aid.

During his second term, though, Trump upped the ante, calling the Ukrainian president a “dictator” for not holding elections, something prohibited under Ukraine’s wartime laws.

One public display of frustration came in the White House on February 28, when Trump shouted at Zelenskyy, calling him “disrespectful” during a gathering with journalists.

The US president also used the appearance to defend his warm relationship with Russia’s president. “ Putin went through a hell of a lot with me,” Trump told Zelenskyy.

The shouting match led to a brief suspension of US aid and intelligence sharing with Ukraine.

In the months since, their two countries have agreed to a deal that would establish a joint investment fund that would allow Washington access to Ukraine’s mineral resources — a long-desired Trump goal.

The US president has voiced concern about the amount of money invested in Ukraine’s security, with Congress appropriating more than $174bn since the war began in 2022. He has also argued that a US mining presence would help deter foreign attacks in Ukraine.

But peace between Russia and Ukraine has remained elusive. Talks between the two warring parties on Friday ended after less than two hours, though they did agree to an exchange of 1,000 prisoners each.

In her op-ed column, Brink was clear that she held Russia responsible for the ongoing aggression.

“Since Russia launched its full-scale invasion of Ukraine on Feb. 24, 2022, it has done what can only be described as pure evil: killed thousands of civilians, including 700 children, with missiles and drones that hit their homes and apartments in the dead of night,” she wrote.

She added that Europe has not experienced “violence so systematic, so widespread and so horrifying in Europe since World War II”.

Brink warned that, if the US did not stand up to Russia, a domino effect could occur, paving the way for military assaults on other countries.