Tariffs and Its Impact on the Interest on the National Debt
I asked Grok what the impact on the imposition of new US tariffs would be on the US debt that has to be refinanced this year. Here is its answer:
The imposition of tariffs by the United States in 2025, which led to higher Treasury yields (e.g., 2-year at 4.003%, 10-year at 4.282%), will increase the interest payments on U.S. debt maturing in 2025 after refinancing. Assuming $2.7 trillion to $4.05 trillion of debt matures in 2025:
- The average interest rate on this debt rises from 3.7% to 4.12% due to the tariff-driven yield increase.
- This results in an additional annual interest cost of $11.34 billion to $17.01 billion on the refinanced debt.
This increase could be higher if the Federal Reserve tightens monetary policy further or if additional tariffs (like the 10% universal tariff starting April 5, 2025) push yields up more. Conversely, if the Fed prioritizes economic growth over inflation control (e.g., by keeping rates lower), the increase in interest costs could be moderated. However, the net effect is a higher debt servicing burden for the U.S. government in 2025 and beyond due to the tariffs.
Source: https://ncrenegade.com/tariffs-and-its-impact-on-the-interest-on-the-national-debt/
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