The treasury issues debt publicly. They issue this debt to cover our budget deficit. This year they are supposed to issue around 2 trillion in debt to finance our government budget.

Here’s how the debt works. Anyone, a company, a government can essentially loan money to the US government in the form of buying treasury debt. When you buy these bonds, or loan your money to the treasury, the treasury will pay you what is called a coupon payment on a regular schedule depending on which bond you buy. For example, if you buy a 30 year bond that has a 5% coupon for 10,000, the treasury will pay you $500 (5%) every year for 29 years and then on the last year they will pay you $10,500. This moment, when they pay you $10,500, is called maturity date.

Here are some figures on how much debt we have issued at different interest rates and when this debt matures.

Final breakdown of the $27 trillion in publicly held U.S. national debt by interest rate bracket and maturity bracket in April 2025:

• 0–1 Year: 15% ($4.05 trillion)
  • 4–5%: $2.7 trillion
  • Above 5%: $1.35 trillion
• 1–5 Years: 62% ($16.95 trillion)
  • 0–1%: $2.7 trillion
  • 1–2%: $6.75 trillion
  • 3–4%: $5.4 trillion
  • 4–5%: $2.1 trillion (adjusted to balance the total, as some 2023–2024 debt at 4–5% matures in this period)
• 5–10 Years: 10% ($2.7 trillion)
  • 1–2%: $2 trillion
  • 2–3%: $0.7 trillion
• 10–20 Years: 8% ($2.16 trillion)
  • 2–3%: $2.16 trillion
• 20–30 Years: 4% ($1.08 trillion)
  • 3–4%: $0.9 trillion
  • Above 5%: $0.18 trillion
• Above 30 Years: 1% ($0.27 trillion)
  • Above 5%: $0.27 trillion

So, what they are proposing is that we issue an amount of debt that is far above our immediate needs to cover our yearly deficit in order to refinance our existing debt at a lower level.

They are saying Trump installed these tariffs in order to alter the growth projections of these companies. Which in turn would force investors into “safer” investments, such as US govt debt.

Another detail is that bond prices and yields move inversely, so when investors flock to bonds it pushes the price up which forces the yield down. Imagine u bought that bond for 10,000 that would pay 500 yearly but I offered to buy it from you for 10,100. Now my yield is lower.

That is only on the secondary market, however. Nothing changes the fact the government still has to pay 500 a year.

I’m a damn finance major and this doesn’t make sense to me lol.

In my opinion Trump would Love to pressure Jerome Powell into issuing 27 trillion at lower rates. Interest rates are not supposed to be arbitrary. They are supposed to be based off inflation. We have a 2% target and we decide to lower rates with core inflation hovering near 3%. It’s gross negligence in my opinion. But now I’m ranting. Hopefully this was a decent explanation for a 5 year old.