The United States will be officially banned on January 20, 2025. The US national debt is growing and cannot be repaid. They can print as much money as they want, you will think. Not really, since January 20th, they cannot. However, that phenomenon explains everything. Why did enemies become friends? Why did friends become enemies? Why did trade wars start with Canada, Mexico? Why did all the markets collapse?
The national debt of the United States is currently over $30 trillion and is constantly growing. It’s a lot, especially considering the fact that the United States collects $4 trillion in taxes a year. So, they owe more than $30 trillion, and they collect only $4 trillion in tax revenue a year. The question remains, how to pay for all that? After all, there is not only an enormous amount to pay, but there is also an interest rate running up. It is only $1 trillion for 1%.
In order to pay off old debts, they take on new debts, and in order to pay off the next debts, they take on more debts. Therefore, the debt is constantly growing. But currently they have a problem. They can’t pay the debt, because if this process doesn’t slow down, the interest on the debt will become very high first, and then the United States will see that people simply will stop lending. Consequently, the Parliament decides how much the US president can spend money. Parliament decides what is the ceiling of the US national debt is, above which it is impossible to jump and print money above this ceiling. Currently, the cutoff of the US national debt ceiling is $36.2 trillion, no more. However, on January 20, they broke through this ceiling and from that moment they have not raise money to extinguish their old obligations to various counterparties.
The main problem of such a skyrocketing national debt of the US is that they spend 1,5 times more every year compared to what they earn. Everything that they collect from the taxes is $4 trillion, and what they spend every year is $6 trillion. From the deficit of 2 trillion, $1 trillion is only the payment on their public debt. The debt is currently refinanced at 4,5% interest rate. The country that every year takes 1,5 times more than it earns is not seen as a great decision to lend money to. At the same time, it is difficult to stop lending to the US, because its public debt is an asset in the gold foreign exchange reserves of many countries. The main holder of US debt is China. So, all of the countries on the planet are not interested in the bankruptcy of the US. Cause if the US becomes bankrupt, it means everything their US obligations, which lie in other countries, will have no payments on these obligations. Another problem is that if the US becomes bankrupt, it means that the dollar will lose its place as a reserve currency, and the vast majority of trade is in dollars.
January 20,2025 there was an inauguration of Donald Trump as the president of the United States. He understands that if there be a very large debt, investors will stop their actions for the US. So, there are several possible ways to decrease the debt. The first and the most desirable by Trump is to lower the refinancing rate. Second one is to lower the costs and the third is to increase the revenues.
In order to lower the interest rate, Trump needs to make the Federal Reserve System to do that. The higher the rate- the more expensive the money, the lower the rate-the cheaper the money. Donald Trump is now interested in a lower interest rate as it will be easier to pay the debt. However, the Federal Reserve System is not (подчиняется) to the US president. FRS is downgrading or raising the rate depending on the state of the economy. If inflation is very high, they raising the rate. So, lending is becoming more expensive, money becomes more expensive and people are receiving less money as a payment for their work, but inflation is slowly stopping. FRS is decreasing the rate when the state of the economy is quite good and it can be stimulated in order to develop it faster. Another case is when the economy is reliving a crisis. Trump is trying to do exactly that-the crisis, through trade wars and tariffs.
Rhetoric second option-to decrease the costs is quite difficult to do, but the third one-to increase real incomes-Donald Trump is also trying to do. By decreasing import and increasing export this idea is realizable. Currently the US is importing goods on $4 trillion and exporting on $3 trillion. Consequently, Trump is imposing the biggest tariffs on the country where the US is importing the most-China, Canada and Mexico (also Japan and Germany). By doing this, he is stimulating companies that are located in these countries to bankrupt or to relocate to the US. In the result, several European and Asian companies have already announced their plans to relocate to the US, such as: Nvidia, Honda, LVMH, Stellantis, Volkswagen, Volvo, Pfizer, Samsung Electronics, LG Electronics and others.
Although, US has recently temporarily stopped some of its tariffs (on China, Canada and Mexico), many of them remain in effect (EU, UK, Ireland, BRICS with exception on Russia, major part of Asia).
Conclusion
The dual crises of soaring national debt and protectionist trade policy are defining the US economic landscape in 2025. While Trump’s tariffs may boost domestic production and reduce short-term deficits, they also risk higher consumer prices and stained international relations. If structural reforms are made, the US will have a delicate balancing act between economic nationalism and global financial stability.
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