Donald Trump recently celebrated the passage of his “Big Beautiful Budget Bill,” a tax-cut-heavy plan that is projected to add at least $3 trillion to the already staggering $37 trillion U.S. national debt. This move has reignited concerns about the sustainability of America’s borrowing, with critics—such as Elon Musk—calling the bill a “disgusting abomination.”
As the U.S. continues to borrow from foreign lenders to cover its budget deficit, many are questioning how long the rest of the world will continue to support such debt levels.
Markets Signal Concern as U.S. Debt Grows and Fiscal Warnings Intensify from Experts
The financial markets have begun to reflect these growing doubts. The U.S. dollar has weakened notably falling 10% against the pound and 15% against the euro since the beginning of the year.
Despite relatively stable interest rates, the widening gap between short- and long-term yields—known as a steepening yield curve—indicates mounting skepticism about the long-term sustainability of U.S. debt. This is happening even as other central banks, like the EU and UK, cut rates more aggressively than the U.S., which would typically support a stronger dollar.
Trump’s $3 Trillion Tax Bill Triggers Debt Alarm, Dollar Dips as Critics Slam RisksRay Dalio, founder of the world’s largest hedge fund, sees U.S. borrowing at a tipping point. He warns that on the current path; the country could soon spend $10 trillion annually just on debt servicing.
Dalio advocates for cutting the budget deficit from 6% to 3% to prevent a future crisis. However, Trump’s bill moves in the opposite direction, slashing taxes more than spending. Dalio and others worry that without corrective measures, the U.S. risks economic trauma through either harsh austerity, inflationary money-printing, or even default.
The Dollar Endures, But Global Confidence Demands Fiscal Discipline and Long-Term Responsibility
Despite these risks, a financial catastrophe is not considered imminent. The U.S. dollar remains dominant globally because there are few viable alternatives. Mohamed El-Erian likened it to the “cleanest dirty shirt”—flawed but indispensable. While some countries are diversifying into other assets like gold or the euro, the dollar’s liquidity and scale still make it the world’s preferred reserve currency. The Bank of England has confirmed that the issue is being taken seriously at high levels within the U.S. Treasury.
The U.S. debt figure—$37 trillion—is staggering, but analysts often assess it relative to GDP. With an annual economic output of $25 trillion, the U.S. has a high debt-to-income ratio, though still lower than countries like Japan or Italy. Moreover, America benefits from having one of the most innovative and productive economies. While concerns about the dollar’s long-term dominance have been voiced for decades—such as in William F. Rickenbacker’s 1968 book Death of the Dollar—the currency remains central to global finance. However, this privilege is not guaranteed and must be responsibly maintained.
