Who owns America’s debt? What to know amid an uncertain economic outlook

LOS ANGELES - The United States owes more than $36 trillion—and a surprising chunk of that IOU isn’t held by American banks or citizens, but by foreign governments. Japan, China, and the U.K. lead the list of countries lending to the U.S., largely through the purchase of Treasury bonds.

As economic uncertainty grows—driven by tariffs, rising interest rates, and concerns over long-term deficits—the question of who owns America’s debt is more than just trivia. It has real implications for everyday Americans, from mortgage rates to job stability.

Here’s a deeper look at where the money comes from, who’s buying U.S. debt, and what it could mean for the country’s financial future.

Who owns the most U.S. debt abroad?

By the numbers:

As of the end of February, the U.S. Treasury Department reported that foreign countries held a combined $8.8 trillion in U.S. government debt. Here’s a look at the top 10:

• Japan: $1.125 trillion
• China: $784 billion
• United Kingdom: $750 billion
• Cayman Islands: $418 billion
• Luxembourg: $413 billion
• Canada: $406 billion
• Belgium: $395 billion
• France: $354 billion
• Ireland: $339 billion
• Taiwan: $295 billion

Smaller economies like Switzerland, Singapore, and Saudi Arabia also hold significant amounts. Altogether, foreign governments own about 24% of the total U.S. debt.

Why are foreign countries selling U.S. Treasuries now?

The backstory:

Normally, U.S. Treasuries are considered one of the safest investments in the world — backed by the federal government and used as a benchmark for everything from mortgages to corporate loans.

But over the past year, rising interest rates, record-breaking budget deficits, and new trade tensions have tested that trust.

• In April, yields on 10-year Treasuries spiked to around 4.5%, after briefly falling below 4%.
• Rising yields typically attract more foreign investment — but not this time.
• A weakened U.S. dollar, despite higher yields, suggests some foreign governments may be selling Treasuries and converting the cash into other currencies or assets abroad.

FILE - A stack of U.S. dollar bills wrapped in bands marked by denomination appears to form the shape of the American flag.  (Photo by Alfred Gescheidt/Getty Images)

A report by Allianz economists notes this "unusual behavior" could mean big players like China or Japan are reducing exposure to U.S. debt — possibly reallocating to European markets.

What does this mean for American households?

Why you should care:

While these moves may sound like high-level finance, they can ripple into everyday life. If more countries begin offloading Treasuries, it could:

• Push up borrowing costs for the federal government — and eventually for consumers
• Drive up interest rates on car loans, credit cards, and mortgages
• Complicate future stimulus efforts or infrastructure spending due to rising debt service costs

In fact, interest on the national debt is already the fastest-growing expense in the federal budget. Last year, the U.S. spent $881 billion on interest alone — more than it spent on defense or Medicare.

What’s next for U.S. debt and foreign investment?

Big picture view:

The Congressional Budget Office estimates interest expenses will hit $952 billion this year — and keep growing, reaching over 5% of GDP by 2055 if trends continue. That raises a critical question: Can the U.S. afford to keep borrowing at this pace if global lenders become less reliable?

For now, countries like Japan and China remain top holders. But if uncertainty continues — particularly over tariffs or political instability — that could change. A large-scale sell-off would likely force the U.S. to pay higher interest rates to attract buyers, putting even more strain on future budgets.