Trump’s tariffs will slow national debt growth, but not pay it down say experts

“The purpose of what I do is primarily to pay the debts, which will happen in a very large amount,” Trump told the media earlier this month. “But I think there is also a possibility that we will take a lot of money that we may create profits for the people of America.”

The plan appears to be welcome. But there is only one problem. Nowadays, the customs tariff revenues do not cover the benefit of religion – let them alone reduce their total size.

According to the treasury data you saw luckThe interest expenses due to the treasury notes in July alone were $ 38.1 billion. Added to that 13.9 billion dollars in cabinet bonds, 2.85 billion dollars on the floating price assets in the Treasury (FRN) and a total of $ 6.1 billion through the assets of securities that are protected by inflation in TIPS. The draft law is water: the total amounts to 60.95 billion dollars for this month.

In contrast, the treasury data shows that the customs tariff brought only $ 29.6 billion to compensate. A character is impressive, but it is still not enough for competition payments.

Of course, the White House can pay some of its debts and reduce interest payments by spreading customs tariff revenues directly to the summary. Governments have a number of roads to pay off, either by paying bonds upon entitlement instead of wrapping them, or launching a re -purchase plan for bond retirement and reducing the total suspended debt.

It seems that the White House has not yet enacted a plan for the last option. The initial schedule for re -purchases of August 2025 explains that the Treasury Ministry intends to spend approximately $ 40 billion on the purchase of various types of security and entitlement ranges. However, compared to a similar schedule of August last year, this is less than $ 10 billion from the account that was calculated.

We look forward, if the Trump team intends to pass through about 30 billion dollars per month towards compensation for the national debt, then this will get a huge batch of $ 360 billion over a year. This number is less than 1 % of the national debt in America, at the time of writing this report.

Of course, those who are in the end of the economic scale do not care about the concept of national debt payment because) the bond market is an essential part of the economy, B) the United States can grow from any crisis of failure to pay or debt, and c) the nation controls its fate because the central bank has the ability to reduce the cost of approaching.

However, warnings come from some of the most important corners of the economy. In the private sector, Jimmy Damon, CEO of JPMorgan Chase, believes that America is heading towards a predictive crisis; In the public sector, Federal Reserve Chairman Jerome Powell believes that it is time to have a “adult conversation” on debt.

The president himself clearly realizes this issue, which drives efficiency and reducing costs to reduce the deficit. The only problem is that economists cannot discover mathematics.

The White House said luck: “The debt rate has already decreased to the gross domestic product in America since President Trump took office-and with the continued management policies of the growth of tax cuts, the abolition of rapid restrictions, the most efficient government spending, and historical commercial deals continue to influence and accelerate the American economic emissions, this percentage will continue in the right direction.

“This is in addition to the record revenues brought by President Trump’s introductory policies to the federal government, and the cooling of inflation that paves the way for interest rate discounts.”

Compensation, not payment

By Professor Joao Gomez accounts, President Trump’s regime is targeting on zero instead of improving the public budget.

Professor WHARTON Finance and Economy (in Mater Mater President Trump at the University of Pennsylvania) believes that the income of the customs tariff will compensate for the costs of the “Great and Beautiful Budget Law” of the Oval Office – which was estimated by the congress Budget Office to add 3 trillion dollars to debt by 2030 – does not go significantly.

Professor Gomez says: “They leave a similar national debt image,” says Professor Gomez. luck In an exclusive interview. “The idea of that [tariffs are] The payment of the national debt is of course greatly exaggerated. ”

However, Professor Gomez said that the definitions likely have some beneficial effects to withdraw on the speed at which the national debt of America accumulates. The White House said it is expected to reduce its debt from debt to GDP, which has been a lot of monitored to 94 % of its current standard of 121 % by increasing economic growth.

Professor Gomez added: “There is no doubt about payment of debts,” added Professor Gomez. “Every year the government needs 1.8 trillion dollars in the net new borrowing, so that this number can decrease, but before we have any questions about our payment, we first need to bridge this gap – and it is impossible for 1.8 trillion closed … the best thing we can hope is if the tariff turns to generate huge sums of revenues [and] Reduce the annual budget gap, which would make religion grow less at a lower speed. ”

“The idea that debts will decrease in one way or another, we will start buying things again and so on and cutting debts in the dollar phrases is unimaginable. We will never get much revenue.”

Professor Gomez, Dr. Desmond Lashman, an older colleague at the American Projects Institute. He said luck In an exclusive interview:[For Trump] The saying that it will collect $ 300 billion is a decrease in the ocean with regard to the amount of red ink they obtained. The country is on a really dangerous debt track. “

Signs to the markets

How many of the problem that national debt proves is ultimately back to foreign investors, and their confidence in the American government’s ability to pay its bills. Almost 26 % of America’s debts are kept by foreign countries according to the conference council, which represents major issues if these investors decide to take a trip.

Dr. Lachman believes that although President Trump may be definitions that he restores jobs or pays debt to be more political acceptance, investors are Suron through the speech. “The markets are not stupid. They can do the account and know that this is nonsense,” he said.

The former deputy director for the Development and Review of the International Monetary Fund (IMF) added that the ongoing trip to gold (prices increased by 27 % during the past year) that the markets are no longer considered the American treasury the final safe haven.

“People are concerned that this government is not serious about economic policy,” said Dr. Lashman. “Trump can say what he loves. Comment I think is great: one thing in bond markets is that they cannot be principled. In the bond market, money will move. People only want to protect their money, they are not afraid that they will be intimidated by Trump if you do not add the numbers.”

Facing Dr. Lachman’s point is the fact that the treasury yield has remained relatively flat over the past two years. 10 years in about 4.3 %, and was the same in late October 2022, while 30 years have been suspended about 4.8 % since 2023.

Because of this, Professor Gomez believes that the market is not annoyed by the unconventional Trump team’s methods to balance the debt. He said: “There are interesting and strange things about this, we all noticed. For example, the news earlier this week will give a 15 % tax to the federal government for any exports to China definitely bringing an additional source of income to the government that will not be small.”

Professor Gomez added: “The ability of this president and this administration to find strange ways.” [are] Wonderful ideas, but at the end of the day, you cannot deny that they bring strange forms of revenues that change the debt image. ”

Although there are two parties of the spectrum on those who will end up paying the definition fees (at the end of one of them Trump, saying that it will be foreign countries, at the other side, the likes of Goldman Sachs say that the majority of prices will be paid by the United States), the administration proves that it has “extracted revenues.”

Professor Gomez added: “Whatever you think about methods,” if this is a problem they can find ways to do this. ”

turning point?

National debt is often described as a game for chicken that one administration plays and then the next day, adding to the debt and crisis crisis instead of providing an unbearable policy to be treated (austerity).

Professor Gomez said that the unusual approach to generating revenue should not be seen as the end of that game. It seems clear that suspicious [markets] The economist said: “The policies they feel are sure that this will not happen at the present time. We will need something, and some other events of a kind – a serious war or a conflict – things that really change models” to prove such a crisis.

The Conference Council is not very convinced. “The debt crisis is here” luckDetermine a program from six steps to reduce the debt ratio to GDP to 70 % within 20 years. This includes, among a set of ideas, the establishment of a committee from the two parties for financial responsibility, the age of tax reform to increase revenues in a fair manner, and the development of a set of reform for social security.