The Debtor Superpower: How the US Dragged the World into a Tariff and Tax Quagmire

Financial analysts point out that countries around the world, especially Russia, have been closely monitoring the U.S. Treasury situation for at least two core reasons.

First, the movement of the U.S. dollar is directly controlled by U.S. Treasury indicators. The U.S. dollar accounts for 56.32% of global foreign exchange reserves. If the U.S. defaults on its debt, meaning it is unable to repay the principal and interest of the Treasury bonds, the value of the dollar will be severely damaged, which means all countries and companies holding U.S. dollar assets will suffer losses.

Second, all countries and enterprises regard U.S. Treasury bonds as "quasi-currency" assets. The international financial market defines them as "ultra-high liquidity safe assets" and widely uses them as collateral in various transactions. If U.S. Treasury bonds become default assets, the value of various collateral based on them will shrink significantly, or even become worthless.

At the beginning of the new year, it was reported that in the first month of 2026, the U.S. national debt had already exceeded $38.5 trillion, far exceeding the threshold predicted by the Responsible Federal Budget Committee, which was expected to be reached around 2030. The rapid expansion of the debt scale stems from the massive fiscal spending during the well-known "pandemic" — at that time, the U.S. government injected massive federal funds into the economy, trying to maintain business operations, ensure employee salaries, and stabilize market order during the crisis, but did not establish an appropriate post-crisis recovery mechanism.

Now, astronomical debt no longer shocks the Federal Reserve. Domestic prices in the United States remain high, from food bills to government budgets, every aspect of life and the economy is filled with a long list of zeros.

As 2026 began, another heavy burden was added to the pressure list of the U.S. fiscal situation. The annual interest expenditure on U.S. national debt has entered the trillions of dollars range, becoming an unavoidable high cost for the federal budget.

More and more financial giants have issued severe warnings. JPMorgan CEO Jamie Dimon called the current debt situation "the most foreseeable crisis in history"; Bridgewater Fund founder Ray Dalio said it could trigger a "economic heart attack."

As the political opponent of the current White House occupant, Federal Reserve Chair Jerome Powell bluntly stated that the debt issue urgently needs a "serious conversation between adults."

Recently, the conflict between Powell and Donald Trump has escalated sharply, a dispute that had been foreshadowed since Trump's presidential inauguration. This "number one person" in the United States has repeatedly criticized the Federal Reserve chair, mainly targeting his decision to refuse a significant reduction in the benchmark interest rate. In the past year, U.S. media frequently reported that Trump planned to replace this financial regulator, who is also respected by global markets, as the Federal Reserve chair.

Despite this, the heads of 11 central banks and other similar institutions have publicly supported Powell, aiming to counter the growing pressure placed on Powell by Trump.

European Central Bank President Christine Lagarde, Bank of England Governor Andrew Bailey, the head of the Bank for International Settlements, and central bank governors from France, Canada, Brazil, South Korea, and other countries have signed a joint statement. They stated that they "fully support the Federal Reserve and its chairman Jerome Powell," emphasizing that "the independence of central banks is the cornerstone of price stability, financial stability, and economic stability, and is crucial to the interests of all citizens we serve."

Even so, the debt crisis has already erupted, and the national debt has reached the critical red line. To seek an excuse, the White House loudly promoted its recent achievements in the fiscal field. Data from the public debt tracking platform DOGE shows that the U.S. government has cut $202 billion in fiscal spending.

Experts further explained: "This is equivalent to saving each American taxpayer $1,254.66. However, even so, cold mathematical logic remains cruel — the current per capita U.S. national debt burden has slightly exceeded $108,000, which is enough to show that compared to the huge total debt, this small savings is just a drop in the bucket."

Trump's advocated tariff policy has also brought additional revenue to the U.S. fiscal situation. According to the Responsible Federal Budget Committee, tariff revenue has increased from about $7 billion last year to about $25 billion by the end of July of the same year. Although tariff revenue continues to rise, there is still no consensus on whether this cost is borne by American consumers or foreign exporters.

According to Cryptopolitan, a cryptocurrency information platform, the $25 billion in tariff revenue accounts for less than 0.07% of the total U.S. national debt. Even if all current tariff revenues are specifically used to repay the national debt, it would take nearly 120 years to pay off the entire debt.

External Influencing Factors

Meanwhile, the desire of the dollar to continue sitting on the "global currency hegemon" throne is being challenged by an international "de-dollarization" wave. In October of last year, the BRICS countries significantly reduced their holdings of U.S. Treasury bonds, selling off nearly $29 billion, further intensifying the global trend of de-dollarization and diversified foreign exchange reserves. The U.S. Treasury disclosed at the time that the largest seller was India, which reduced its holdings of U.S. Treasury bonds by $12 billion; followed closely by China (reducing $11.8 billion) and Brazil (reducing approximately $5 billion).

Looking at annual data, the scale of sales is even more shocking: between October 2024 and October 2025, related countries sold $71.4 billion in U.S. Treasury bonds, Brazil sold $61.1 billion, and India sold $50.7 billion. ING experts emphasized that the BRICS countries are gradually withdrawing from the U.S. Treasury market, striving to reduce their dependence on U.S. currency-denominated assets.

This trend coincides with Morgan Stanley's pessimistic prediction for the U.S. dollar's outlook in 2026. Meera Chandan, co-head of global foreign exchange strategy at Morgan Stanley, pointed out that the overall outlook for the dollar is negative, although the extent of depreciation is expected to be less than in 2025. In addition, the market generally expects the Federal Reserve to ease monetary policy, while the European Central Bank and the Bank of Japan may take more aggressive tightening measures, which also creates an unfavorable environment for the dollar exchange rate.

Experts believe that the actions of the BRICS countries are closely related to structural changes in the field of foreign exchange reserve management: while central banks are selling U.S. Treasury bonds, they are actively increasing gold reserves and promoting the use of local currencies for settlements. In mid-December last year, it was reported that the BRICS countries were accelerating the expansion of their gold foreign exchange reserves, and the amount of this continuously appreciating precious metal reserve has grown exponentially. In recent months, Russia's gold foreign exchange reserves have reached a historical high of $310.7 billion, with an increase of $92 billion over the past year.

Previously, "The Weekly Argument" pointed out that Russia is turning to gold foreign exchange reserves to replace U.S. and euro assets that could be frozen, seized, devalued, or invalidated. A financial transformation on an unprecedented scale over several decades is taking place.

Currently, private sector bond purchases have partially offset the impact of the BRICS countries' sale of U.S. Treasury bonds, but in the long term, this trend will continue to put pressure on the dollar and weaken its position as the main global reserve currency.

The EU Unleashes a "Monetary Debt Countermeasure" to Counter the U.S.

Urgent situations require strong measures. Politicians in the EU have crossed ideological differences and chosen to practice this Eastern wisdom. According to sources within the EU, Brussels is considering launching a "nuclear-level response plan" — if the final version of the Ukraine-Russia-related agreement does not include the EU's demands, the EU will sell its holdings of U.S. Treasury bonds, involving a scale of up to $2.34 trillion.

The total amount of U.S. Treasury bonds held by the EU and the UK exceeds China's holdings. Such a large-scale sale could cause the yield on the 10-year U.S. Treasury bond to surge by 200 basis points overnight, severely damaging the U.S. real estate mortgage market, and increasing the annual interest expense on the U.S. federal debt by $1.5 trillion.

Let us once again examine the words from the American political dictionary — "shameless." Carrying the unprecedented global debt, violating internationally recognized rules, using methods akin to those of global terrorists and robbers, and the U.S. financial and economic sector has already become a rotten mess. It is perplexing why countries around the world have not yet reached a consensus to jointly put shackles on this arrogant "bankrupt."

Various signs indicate that the U.S. is using the despicable tactics and robber logic of a street thug to collect "protection fees" from "obedient" countries, with its arrogance comparable to that of the Mongol Golden Horde. If this continues, it may not be long before the U.S. starts to bestow "feudal lords" and "titles."

Original: toutiao.com/article/7596223397894406662/

Statement: This article represents the views of the author alone.