Trump's tax plans: interest rates rise, markets in turmoil!

Trump's tax plans: interest rates rise, markets in turmoil!

Economic pressure is increasing in the US as President Donald Trump plans sweeping tax cuts. According to information from Focus These plans are alarming markets as interest rates on 30-year US Treasury bonds rise to 5.1 percent, close to a 20-year high. Amid negotiations between the Trump administration and Republican lawmakers over this tax reform, fears of a drastic increase in the already high budget deficit are growing.

Resistance to Trump's tax plans, which could primarily benefit wealthy citizens, is increasing, even among conservative Republicans. Critics warn of the financial risks associated with implementing this reform. There is also low demand for the recent auction of 20-year government bonds, underlining market nervousness.

Rising national debt and concerns about the economy

According to current data, the US national debt stands at an impressive $36.2 trillion, which is about 125 percent of gross domestic product. Since Trump took office, the national debt has increased from under $14 trillion at the end of 2016 to almost $30 trillion. Analysts from ZDF warn that confidence in the American economy is waning and the markets are reacting uneasily. Investors fear a growing budget gap as a result of the new tax reforms.

The rating agency Moody's is particularly critical, withdrawing the top rating Triple-A from the USA and expecting a further deterioration in creditworthiness. The government's interest burden is estimated at $880 billion in 2024, which is more than the entire defense budget. In this context, Republicans are discussing new proposals to stabilize the markets.

Social impacts and future challenges

Trump describes his tax reform as the “Big Beautiful Bill,” which not only provides for permanent tax cuts for the rich, but also a reduction in social security contributions. While low-income earners benefit only marginally, the poorest households could face a greater burden as cuts to social programs such as Medicaid and federal food assistance are planned. It is estimated that these changes could affect more than 70 million Americans who rely on such benefits.

Given all of these developments, it remains to be seen how Trump's plans and the associated economic challenges will affect the future stability of the American economy. The proposals are now being discussed in the Senate, where Republicans have a narrow majority. The next few weeks are likely to be crucial for the future course of American financial policy.