Raising the debt ceiling, increasing tariffs, pressuring the Federal Reserve, promoting stablecoins\u2014President Donald Trump\u2019s unique ways of addressing America\u2019s financial woes are raising concerns abroad. Germany\u2014the world\u2019s largest creditor nation and the leader of the euro, the dollar\u2019s chief rival\u2014appears especially worried and senses an opportunity.<\/p>\n
Debt:<\/strong> The United States has an incomprehensible national debt of over $37 trillion. Its interest payments exceed its military budget. Like others before him, President Trump pledged<\/a> to tackle the debt problem. But instead of decreasing spending, his budget is bringing more of the same.<\/p>\n Dr. Martin L\u00fcck, one of the leading capital market strategists in the German-speaking world, told<\/a> Spiegel on May 26: \u201cTrump\u2019s policies are fueling inflation, and investors are losing faith that the U.S. will get its debt under control. \u2026 What Trump is doing is performing open-heart surgery on the global economy, crafting instructions to total collapse.\u201d<\/p>\n L\u00fcck warned at the time that we may be \u201csix months or a year away from a crash.\u201d<\/p>\n One way the U.S. sustains its $37 trillion debt is by issuing treasury bonds, which investors buy in exchange for regular interest payments. But in May, Moody\u2019s Ratings downgraded the U.S. credit rating from a perfect aaa to Aa1. Following the downgrade, Spiegel asked L\u00fcck: \u201cAre U.S. government bonds no longer the \u2018safe haven\u2019 that people turn to whenever there is a crisis?\u201d<\/p>\n His answer: \u201cIn principle, that is still the case, but not under Trump. His disastrous policies are poison for the economy, and that is how the financial markets see it.\u201d<\/p>\n People fear that the U.S. could default on its debt and trigger a massive financial crisis. The only reason this hasn\u2019t happened yet is because enough people still trust the U.S. dollar over alternatives. But this is starting to change. Many investors have started to invest in German government bonds<\/a> instead.<\/p>\n Tariffs:<\/strong> In 2018, Trump posted on Twitter that tariffs would enable the U.S. to pay off \u201clarge amounts\u201d of its debt. Seven years later, in April 2025, Trump began putting that plan into action, which at first caused an economic scare. The Washington Post wrote April 9:<\/p>\n
<\/p>\n President Donald Trump may have brought the world to the brink of a financial crisis before pausing his tariff war on Wednesday, as the $28 trillion market for treasury bonds displayed unusual strains in the hours before his change of course.<\/p>\n
\n<\/p><\/blockquote>\n On that same day, President Trump acknowledged, \u201cThe bond market is very tricky.\u201d Instead of tariffing almost the whole world simultaneously, Trump has renegotiated trade deals and gradually introduced tariffs. But people continue to fear a global crisis may be around the corner.<\/p>\n Trump believes the fears are unjustified. Earlier this month, he posted on Truth Social: \u201cIt has been proven, that even at this late stage, tariffs have not caused inflation, or any other problems for America, other than massive amounts of cash pouring into our Treasury\u2019s coffers. Also, it has been shown that, for the most part, consumers aren\u2019t even paying these tariffs; it is mostly companies and governments, many of them foreign, picking up the tabs.\u201d<\/p>\n Pressuring the Federal Reserve:<\/strong> One way to fight inflation is to keep interest rates high\u2014and that\u2019s exactly what the Federal Reserve under Jerome Powell has done. But President Trump is far from pleased with Powell. Higher rates mean higher debt payments, and if the U.S. spends more paying interest, it has less leeway in its budget. Consequently, Trump has repeatedly pressured Powell to cut interest rates.<\/p>\n \u201cThe Fed\u2019s independence is seriously threatened by Trump,\u201d warned financial market expert Christian R\u00f6hl, as Germany\u2019s Bild reported on August 24. While Trump may not dismiss Powell, he will likely nominate a successor loyal to him next year. \u201cThat would weaken confidence in the dollar and accelerate its gradual loss of importance as a global reserve currency,\u201d R\u00f6hl noted.<\/p>\n J\u00fcrgen Matthes, economist at the German Economic Institute in Cologne, warned: \u201cIf Trump continues to undermine the independence of the U.S. Federal Reserve, he will be undermining a central pillar of the U.S. financial market. Investors would punish it in the long term if they could no longer rely on the Fed to reliably combat inflation.\u201d<\/p>\n But while the Fed so far has stuck to its course, some of Trump\u2019s supporters see the solution to America\u2019s financial woes in cryptocurrency.<\/p>\n Stablecoins:<\/strong> \u201cStablecoins have the potential to ensure American dollar dominance internationally to increase the usage of the U.S. dollar digitally as the world\u2019s reserve currency, and in the process create potentially trillions of dollars of demand for U.S. treasuries, which could lower long-term interest rates,\u201d said David Sacks, White House special adviser for artificial intelligence and crypto, at a February press conference.<\/p>\n