US Debt Reaches $37 Trillion Years Before Expected

The U.S. government’s gross national debt has climbed past $37 trillion, a record-breaking milestone that underscores the rapid growth of America’s fiscal obligations and the mounting cost pressures on taxpayers.

The Treasury Department confirmed the figure Tuesday in its latest daily financial report.

In January 2020, the Congressional Budget Office (CBO) estimated that gross federal debt would not surpass $37 trillion until after fiscal year 2030. However, a combination of unprecedented federal borrowing during the COVID-19 pandemic and more recent spending measures has pushed the nation to that threshold far sooner. The pandemic, which began in 2020, prompted both the Trump and Biden administrations to approve trillions in emergency relief to stabilize a shuttered economy and aid recovery.

Newsweek has reached out to the Treasury Department via email on Tuesday night for comment.

Trump’s Big, Beautiful Bill’s Impact on National Debt

That borrowing surge has continued into 2024. Earlier this year, President Donald Trump signed into law a Republican-backed tax cut and spending package that the CBO projects will add $4.1 trillion to the national debt over the next decade.

Wendy Edelberg, a senior fellow at the Brookings Institution, said the legislation ensures “we’re going to borrow a lot over the course of 2026, we’re going to borrow a lot over the course of 2027, and it’s just going to keep going.”

Fiscal policy experts warn that the consequences are far-reaching. Michael Peterson, CEO of the Peter G. Peterson Foundation, cautioned that sustained borrowing drives up interest rates, increasing costs for households and businesses while crowding out key federal priorities.

“It creates a damaging cycle of more borrowing, more interest costs, and even more borrowing,” Peterson said.

The Government Accountability Office lists several impacts of rising federal debt on everyday Americans: higher mortgage and auto loan rates, reduced business investment leading to lower wages, and costlier goods and services.

Rising U.S. federal debt puts upward pressure on interest rates and, by extension, inflation. Unchecked borrowing risks fueling inflation, especially if the government responds by injecting more money into the economy.

Despite persistent inflation hovering above the Fed’s 2% target—with July’s consumer prices up 2.7% year-over-year and core inflation rising to 3.1%—the Federal Reserve remains cautious, holding rates steady amid uncertainty over how tariffs and mounting debt will influence long-term inflation dynamics.

How much debt is the US in?

The pace of debt accumulation has also quickened dramatically. The U.S. hit $34 trillion in January 2024, $35 trillion in July, and $36 trillion in November — meaning each additional trillion has been added roughly every five months. According to the Joint Economic Committee, another trillion could be added in just 173 days at the current rate.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, urged lawmakers to act swiftly. “Hopefully this milestone is enough to wake up policymakers to the reality that we need to do something, and we need to do it quickly,” she said.

The mounting debt is also tied to a growing budget deficit, which rose 20% in July compared to the same period last fiscal year, according to Treasury Department data. The increase came despite record customs revenue from President Trump’s tariffs, which generated $21 billion in July alone — a 273% increase over last year. A Treasury official, speaking to the Associated Press on condition of anonymity, attributed higher spending partly to rising interest payments on the public debt, as well as cost-of-living increases in Social Security and other federal programs.

Even as Trump touts the tariffs as a boon to U.S. finances, federal spending continues to outpace revenue. Analysts note that while tariff collections could rise as companies deplete pre-tariff inventories and import more goods, such gains are unlikely to meaningfully shrink the deficit. Persistent shortfalls mean the government must keep borrowing, further driving up the national debt.

How much US debt does China Own?

As of mid-2024, China holds roughly $770 billion in U.S. Treasury securities, making it the second-largest foreign holder of U.S. debt after Japan. That figure represents about 11% of all foreign-held U.S. debt and around 2% of the total U.S. national debt, which has surpassed $37 trillion. China’s holdings have declined in recent years from a peak of more than $1.3 trillion in 2011, as Beijing has diversified its reserves and sought to reduce exposure to U.S. assets amid ongoing trade and geopolitical tensions.

China invests in U.S. debt primarily to manage its currency value, stabilize its export-driven economy, and store reserves in a secure, liquid market. While its share of America’s overall debt is relatively small compared to domestic holdings, the U.S.-China debt relationship remains a point of strategic and political interest. Analysts note that sudden large-scale sales by China could disrupt markets, but such a move would also risk devaluing its own holdings, making the threat more symbolic than practical.

This article includes reporting by the Associated Press.

Update: 8/12/25, 5:30 p.m. ET: This article was updated with new information and remarks.

Update: 8/12/25, 6:40 p.m. ET: This article was updated with new information and remarks.