When the next credit rating downgrade hits how bad will it be for US markets?

https://finance.yahoo.com/news/theres-another-us-debt-downgrade-warning-203755354.html

Credit rating agencies are warning that the United States could face another downgrade in its national credit score, and several of these warnings are directly tied to policies associated with former President Trump and his current administration.

Key Factors Behind Downgrade Risks:

Rising Federal Debt: The U.S. national debt has reached historic highs, now about $36 trillion, with public holdings at roughly 100% of GDP. This trend is expected to worsen with further tax cuts and spending increases, both of which are central to Trump’s economic agenda.

Protectionist Trade Policies: Trump’s tariffs and threats of extended trade wars have already weakened the dollar and increased global skepticism about the U.S. economic outlook. Agencies warn that a prolonged trade war or drastic measures like capital controls could further erode trust in the dollar and U.S. creditworthiness.

Political Instability and Governance: Credit agencies cite repeated political brinkmanship over the debt ceiling, government shutdown threats, and increased polarization as risks that undermine fiscal management and confidence in U.S. governance.

Negative Outlooks from Agencies:

S&P and Fitch have already downgraded the U.S. from AAA to AA+ in recent years, citing fiscal deterioration and governance issues.

Moody’s, the last major agency maintaining a AAA rating, shifted its outlook to negative in late 2023 and has warned that further policy decisions—such as unfunded tax cuts and high tariffs—could trigger a downgrade as early as 2025