NEW YORK (Reuters) -Ratings agency Moody's said on Tuesday that the U.S.' fiscal strength is on track for a continued multi-year decline as budget deficits widen and debt becomes less affordable.

The agency said in a report that the country's fiscal health deteriorated further since Moody's lowered its outlook on the U.S. triple-A rating in November 2023.

The report comes amid heightened uncertainty in U.S. financial markets as President Donald Trump's decision to impose punitive tariffs on key trading partners has sparked investor fears of higher price pressures and a sharp economic slowdown.

"Even in a very positive and low probability economic and financial scenario, debt affordability remains materially weaker than for other Aaa-rated and highly rated sovereigns," Moody's said.

Moody's is the last among major ratings agencies to keep a top, triple-A rating for U.S. sovereign debt, though it lowered its outlook in late 2023 due to wider fiscal deficits and higher interest debt payments.

U.S. government debt has become less affordable due to higher interest rates, which means that the central role of the dollar and Treasury market has become more critical in supporting the triple-A rating, the agency said on Tuesday.

"Given the potential negative credit impact of sustained high tariffs, unfunded tax cuts and significant tail risks to the economy, we see diminished prospects that these strengths will continue to offset widening fiscal deficits and declining debt affordability," it added.