...Tariffs increase costs and test pricing power. We estimate that tariffs proposed in April 2025 could increase total costs for capital goods manufacturers by an annualized 8%- 10%, which would require price increases of 6%-8% to hold profits steady. The most stable industry credit outlook in a decade. Almost 80% of our outlooks are stable in mid-2025, underpinned by slow revenue growth and modest debt usage. Negative outlooks outweigh positive outlooks by only 1%. Outlooks have stabilized among low speculative-grade companies, but only after we downgraded about 20% of those issuers in the last 18 months. U.S. spending priorities shift. Tax credits on items like renewable energy are being phased out, which will have less of an effect on credit quality compared to a more abrupt windup. Meanwhile, the immediate expensing of new factories and equipment could stimulate new demand for capital goods in the U.S....
