The US has barely caught its breath from the tariff shock, only to be confronted with a potential "debt crisis." According to Wall Street Journal reporter Nick Timiraos, the US economy has just stepped back from the brink of a major tariff increase crisis, now facing a second wave of impact: the rising potential effects of government borrowing costs are becoming increasingly evident.

Timiraos points out that although Congressional Republicans and the White House are pushing a series of tax cuts to try to bolster the US economy and mitigate the negative effects of tariffs, the enormous cost of this tax bill could exacerbate the fiscal deficit, further increasing the government's borrowing demands and interest rates.

Following poor performance in the 20-year bond auction and the House passing the Trump administration's tax and spending plan, on Thursday (22nd), the yield on 30-year US bonds surpassed 5.1%, marking a new high since 2007. Although the market stabilized somewhat afterward, overall bond sell pressure remains, showing investors' high vigilance towards future borrowing costs.

Timiraos notes that if the tax bill further expands the fiscal deficit, the government will be forced to issue more national bonds to cover the expenditure gap, leading to a continued rise in borrowing rates. US Treasury Secretary Ben S. Bernanke emphasized that maintaining the 10-year Treasury yield at a lower level is crucial, as it affects both corporate and consumer loan costs.

Experts warn that deficits and high borrowing costs could trigger a new wave of economic pressure. BCA Research's chief strategist Peter Berezin states that the market will test whether the Trump administration and Congress are willing to correct unsustainable fiscal policies.

According to the nonpartisan Congressional Budget Office (CBO) estimates, the Republican tax cut plan is expected to raise US deficits to 7% of GDP. For an economy with low unemployment during a peacetime period, this represents an unprecedented scale of borrowing.

The CBO also predicts that the plan will release about $280 billion in economic stimulus next year (about 0.9% of GDP), mainly from tax cuts. Although this may offset some tariff shocks in the short term, long-term fiscal risks are still expanding.

However, Republican and White House officials believe that the CBO's predictions overlook the positive impact of other economic policies (such as tariffs and deregulation) on revenue. They assert that economic growth will exceed tax losses, and tax cuts will not lead to significant deficit expansion.

Analysts warn that effective fiscal rectification in the short term seems unlikely. Evercore ISI strategist Krishna Guha points out that should economic recession or unforeseen events occur in the future, the deficit problem may worsen further.

Piper Sandler's policy research director Andy Laperriere adds that even if the 10-year Treasury yield exceeds 5%, Congress is unlikely to change its fiscal plans. The Trump administration had previously promised to cut spending significantly through the Department of Government Efficiency led by Musk to reduce the deficit and issue refunds, but this plan has been substantially scaled back, with actual savings expected to fall short of projections.