The US national debt is rising fast, putting major foreign creditors under pressure. By the end of 2025, the debt reached about $38.5 trillion, nearly equal to the country’s GDP. Net interest payments surpassed $1 trillion for the first time.
China holds $689 billion in US Treasuries, while Japan holds nearly $1.2 trillion. Both countries rely on dollars for trade, but rising US debt makes further investment riskier. Large Treasury sales could shake global markets.
The debt growth is driven by permanent tax cuts and limited spending reductions under the Trump administration. Interest payments have nearly tripled in five years, from $345 billion in 2020 to $970 billion in 2025. Analysts expect payments to reach $1.5 trillion by 2030.
Political conflicts also add uncertainty. Trump has criticized the Federal Reserve and imposed tariffs, creating more risks for the dollar. Goldman Sachs and Deutsche Bank forecast further dollar weakness, though the global economy remains resilient.
For China, the situation offers a chance to expand the yuan internationally. Beijing may push for more global use of its currency. Experts say China must strengthen capital markets, the rule of law, and central bank independence to gain global trust.
Despite rising debt and interest, US financial dominance remains strong. Deep markets, global reach, and safe assets keep the dollar central to international finance. Still, 2026 could be a key year for China, Japan, and global currency dynamics.
