Trump Administration Paid More Than 14 Trillion Won in Extra Borrowing Costs Over Six Months of the Iran War

[Financial News] As global bond yields surged after the Middle East war, borrowing costs for the Group of Seven (G7) rose by $16 billion, or about 22.1 trillion won. The U.S. interest burden, in particular, is climbing sharply. Over the past six months, the United States has paid an additional $10.6 billion, or about 14.6 trillion won, in interest costs. That figure is expected to rise to $21.7 billion by the end of the first quarter next year.
The Financial Times (FT) reported on the 30th local time that, based on an analysis of government bond issuance data across the G7, the additional interest burden has reached $16 billion. If the upward trend in interest rates continues, the extra cost could climb to $34 billion, or 46.9 trillion won, by the end of the first quarter next year.
The $16 billion figure reflects the actual increase in borrowing costs compared with prewar interest rates. The $34 billion estimate is based on countries' future funding plans and issuance patterns by maturity.
FT noted that nearly all government bonds across all maturities in the G7 countries it analyzed are trading at higher yields than in February. As a result, new bond issuance is becoming more expensive.
U.S. Treasury yields have risen sharply in recent weeks as investors grow more concerned about rising public debt and inflation. Even the U.S. Department of the Treasury's expanded buyback program has not reversed the upward trend.
G7 countries that rely heavily on energy imports, including the United Kingdom, Italy, Germany and Japan, are also being affected by higher inflation forecasts tied to an energy supply crisis caused by a possible closure of the Strait of Hormuz.
That is adding to the strain at a time when government finances are already under pressure.
Mohit Kumar, chief European economist at Jefferies, said, "Fiscal deficits are widening globally as countries pursue expansionary policies," adding, "There is also a possibility that populist policies will emerge ahead of the United States midterm elections and general elections in several European countries."
There are also concerns that markets are entering a zone that could be negative for both stocks and bonds. Political uncertainty in major economies, geopolitical risks, and rising government spending on defense and climate response are all adding pressure. At the same time, increased corporate bond issuance to fund Artificial Intelligence (AI) investments is intensifying competition in the bond market and pushing yields higher.
Michel Martinez, chief European economist at Societe Generale, said, "Competition for sovereign bonds is increasing because of the AI investment boom and other structural spending needs, including defense, the energy transition and reindustrialization."


[email protected] Lee Seok-woo, international affairs Reporter