WASHINGTON (AP) — The world is getting more uptight about lending money to PresidentDonald Trump’sgovernment — causinginterest ratesto climb in ways that areworsening affordability pressures,hampering economic growthand creating anew risk for Republicansin November’s midterm elections.

The energy price spike triggered by the Iran war has seeped into theprice of bondsthat help fund the U.S. government. Interest rates on a 10-year U.S. Treasury note are topping 4.44%, up from 3.95% before the war started at the end of February. Averagemortgage rateshave climbed to their highest levels in nine months, while auto sales are slumping.

The challenge is global in scale, as interest rates have risen for multiple countries as the world has been adjusting to the prospect of higher inflation, mounting questions about the sustainability of government debt and a dramatic surge ininvestment in artificial intelligence.

Trump has tried to assure Americans that he has a plan to trim the roughly $1.8 trillion annual budget deficit. In the past, he has pointed torevenue from tariffs, payments from foreigners for his“Gold Card”visa, spending cuts made by theDepartment of Government Efficiency, and faster economic growth. Last week, he said thefraud task forceled by Vice President JD Vance would be the key to unlocking massive savings.

“If he does really great, we’ll have a balanced budget without having to do anything,” Trump said.

Economists say Trump’s strategies to meaningfully curb the deficit are unlikely to deliver the promised results.

The cost of servicing thenational debthas tripled since 2021 to more than $1 trillion annually, said Jessica Riedl, a budget and tax fellow at the Brookings Institution.

“President Trump signed atax cut billthat will likely add $5 trillion to 10-year deficits — and tariffs are offsetting only a small fraction of those costs,” she said. “Budget deficits are still projected to soar past $4 trillion annually within a decade under current policies.”

Deficits are expected to grow over the next decade as the costs ofSocial Security and Medicareoutstrip tax revenues.

The 10-year U.S. Treasury rate climbed as high as 4.67% in the middle of May and has since eased asnegotiations over the Iran ceasefirecontinued — just as rates initially climbed in 2025 because of Trump’s“Liberation Day” tariffsand then began to decline once Trump backed off the most extreme increases.

Source: Drudge Report