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The United States owes foreign investors $8.5 trillion of its national debt—almost one-quarter of its total debt.

The graphic above illustrates the foreign holders of U.S. national debt using data from the U.S. Department of the Treasury, as of December 2024.

The Growing U.S. Debt

The U.S. debt increases when the government spends more than it collects in taxes and other revenue. To cover this shortfall, the U.S. Treasury issues Treasury bills, notes, and bonds. These securities are highly liquid, widely used by central banks as reserves, and favored by investors during market volatility.

The national debt is the total of the government’s accumulated budget deficits, minus any surpluses.

As of today, the U.S. national debt has surpassed $34 trillion and, according to projections from the Congressional Budget Office, could reach $50 trillion within the next decade.

Japan is the largest foreign holder of U.S. debt, with over $1 trillion, followed by China ($759 billion) and the United Kingdom ($723 billion).

Does the U.S. Need to Pay Off Its Debt?

Technically, the U.S. must pay interest on its debt and the principal of maturing government bonds. However, as reported by Business Insider, it is rare for nations to fully pay off their debt. For example, Great Britain still holds debt from the Napoleonic Wars.

More important than the total debt is its relationship to GDP—in other words, how much the country’s resources can cover interest and principal payments on that debt.

The U.S. debt-to-GDP ratio was approximately 98% at the end of FY 2024—just below the critical 100% threshold, which some experts consider a warning sign.

Debt Under Trump

Another way to contain the growth of debt would be by reducing federal spending.

To achieve this, the new Trump administration established the Department of Government Efficiency (DOGE).

Under Elon Musk’s leadership, DOGE has already targeted several federal agencies. The department’s goal is to identify and eliminate unnecessary expenditures, with Musk estimating potential savings of $2 trillion in government “waste.”

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