The US national debt has surpassed $40tn, sparking concerns about the country’s economic sustainability, according to the BBC — this milestone, driven by surges in public spending under both the Trump and Biden administrations, highlights growing fiscal challenges.

Debt Growth and Economic Warnings

According to Maya MacGuineas, president of the Committee for a Responsible Federal Budget, it took nearly 200 years for the US national debt to reach $1tn for the first time in 1981. That event was treated as a wake-up call, with President Ronald Reagan addressing the nation on the issue; However, today’s debt levels are far more concerning. Jumping to the US’s 250th year, the country is now spending more than $1tn just on interest payments on its debt.

At the beginning of Trump’s first presidential term in 2016, US national debt stood at just under $20tn; it has since doubled in the decade, According to the Congress Joint Economic Committee, the figure is rising by about $90,000 every second, or $7.8bn a day. Eric Swanson, a professor of economics at the University of California and former senior economist at the Federal Reserve, notes that the level of interest rates today is significantly different compared to a decade ago, adding to the economic challenges.

Global Energy and Inflation Pressures

While the US grapples with its debt, global energy prices and inflation are also contributing to economic uncertainties; In the UK, gas prices soared at the sharpest pace in almost four years, according to the Office for National Statistics (ONS). This led to an increase in the cap on household energy bills in July — the energy cost surge followed the US-Israel war with Iran, which has restricted global oil supplies. Energy costs for households rose on 1 July after Ofgem, the energy regulator, increased the price cap on gas and electricity costs by 13%, adding £221 a year to the typical bill.

Cornwall Insight, an independent energy consultancy, forecasts a 4% rise in energy bills from October, which would take them to the highest level since July 2023. Ongoing uncertainty over the US-Iran conflict, including the effective closures of the Strait of Hormuz, a key trading passage for oil and other commodities, continues to impact energy prices. Plus, the ongoing heatwave across Europe has increased gas demand for power generation to meet air conditioning and cooling needs, compounding energy price pressures.

Trade and Economic Concerns in Europe

Meanwhile, Europe has taken a cautious approach to its trade agreements, particularly with Mercosur, the European Parliament recently decided that the agreement between the European Union and Mercosur will include an automatic farming safeguard system. If imports exceed five percent of the average over the past three years or if European prices fall more than five percent, Brussels may suspend tariff benefits for products such as beef, poultry, eggs, sugar, or citric fruits.

This decision reflects Europe’s concerns about the impact of agro-exporting efficiency from Mercosur on its medium-sized producers; the lowering of the threshold from the eight to ten percent originally proposed by the Commission to five percent exposes the continent’s fears. The EU Commission must now report to the EU Parliament every six months on the impact of South American imports; If there is any damage, preferences are withdrawn, placing trade on probation. Europe demands higher environmental, employment, and regulatory standards from its partners while activating automatic shields when those partners manage to compete effectively.