Trump Stymied by Triple Whammy of $54 Trillion Debt, 6.7% Mortgage Rates, and $5 Diesel

President Trump is facing an economic triple whammy. According to a report by the Financial Times (FT), U.S. federal government debt has surpassed $40 trillion (approx. 54 quadrillion won) for the first time in history, mortgage rates have soared to 6.7%, and diesel prices have breached $5 per gallon, intensifying high inflation pressures.

U.S. Treasury Secretary Scott Bessent announced on the 19th that the government would double the scale of its long-term Treasury buybacks to a minimum of $4 billion per session, up from the previous maximum of $2 billion. In an interview with CNBC on the 20th, Secretary Bessent explained that buyback volumes could exceed $4 billion per session, signaling that current Treasury rates do not reflect economic conditions.

The surge in debt is underpinned by tax cut policies. Excluding the 2020 COVID-19 pandemic period, debt is rising at the steepest pace ever as tax revenues have fallen due to Trump’s tax cuts while expenditures have increased. Although the Trump administration significantly cut budgets for social safety nets such as Medicaid and food assistance for low-income earners, large-scale tax cuts have instead inflated the fiscal deficit. Diane Swonk, Chief Economist at KPMG US, warned that U.S. fiscal spending continues to outstrip tax revenues, with the Iran war causing expenditures to rise even further.

Secretary Bessent has pledged to reduce the debt-to-GDP ratio to 3% by the end of a potential second Trump term, arguing on the 20th that this goal remains highly probable. However, Michael Strain, Director of Economic Policy Studies at the American Enterprise Institute (AEI), pointed out that achieving this target would require politically contentious choices, such as drastically slashing Medicare and Social Security budgets.

The fallout from the Iran war is directly impacting prices at gas stations and housing markets. The blow to energy prices—which voters are most sensitive to—is particularly severe. The average price of gasoline at U.S. pumps hit $4.11 per gallon on the 21st, surging approximately 40% since the start of the Iran war on February 28. Diesel prices skyrocketed by 40% to $5.58 per gallon, with the average diesel price in the second Trump administration already exceeding that of the former Joe Biden administration.

Mortgage rates are soaring as well. The 30-year fixed rate, which stood at 5.98% before the Iran war, has risen to around 6.65%. This is attributed to rising oil prices pushing up U.S. 10-year Treasury yields. Jarrett Sieberg of TD Securities analyzed that there is currently no alternative but to focus on lowering rates.

Consumer sentiment has dropped to a historic low, and polls show voters believe the economy has worsened under the Trump presidency. While growth momentum persists—driven by AI infrastructure investment spending—it is gradually weakening. Last year’s growth rate was 2.1%, while it reached only 1.5% in the second quarter of this year.