Also because of tariff repayments: new US debt rises to a five-year high
Despite announced cuts, new US debt will grow to almost two trillion dollars in the 2026 budget year.
Quick Look
- New US debt rose to $1.99 trillion in the 2026 fiscal year.
- Despite Donald Trump's promise of spending cuts, the deficit is growing by 12 percent, driven by record interest payments and tariff revenue repayments.
AI-generated summary
Why It Matters
The USA is recording a sharply increased deficit in the 2026 fiscal year despite announced spending cuts.
When Donald Trump moved into the White House for the second time, he announced that he would reduce government spending and thus new debt. However, the trend is currently going in the other direction: the USA is sliding ever deeper into trouble during his presidency.
New US debt has risen to its highest level since 2021 despite spending cuts announced by President Donald Trump. In the 2026 fiscal year, which ended at the end of September, the deficit was $1.99 trillion, twelve percent more than in the previous year, as the Treasury Department in Washington announced.
In the previous fiscal year, the deficit was $1.78 trillion. Federal government spending in Washington increased by six percent to $7.4 trillion, while revenue only increased by three percent to $5.4 trillion.
Rising interest rates on debt placed a particularly heavy burden on the budget. Interest payments increased by $144 billion to a record $1.36 trillion. In addition, there were repayments totaling $145 billion in tariffs after the Supreme Court invalidated much of Trump's tariffs in February. Due to the deficit, the mountain of debt in the USA continues to grow significantly. The total national debt in the USA exceeded the threshold of 40 trillion dollars (currently almost 34.4 trillion euros) for the first time in August.
After returning to the White House, Trump promised to reduce government spending and thus new debt. Finance Minister Scott Bessent had set a target of a reduction to three percent. According to the Ministry of Finance, the deficit was now estimated at 6.2 percent of economic output.
Economist Nancy Vanden Houten of Oxford Economics expects a similarly high deficit in the coming fiscal year. If the war with Iran lasts well into the new fiscal year, the budget gap could be even larger, she warned.
What to Watch
AI outlook — possibilities, not facts
A similarly high deficit in the coming financial year
Likely · Within months
Open Questions
- How does the government plan to reduce the interest burden in the long term?
- Will the conflict with Iran affect the budget?
