Can the U.S. Debt Crisis Be Fixed with Tariffs and Stablecoins? Here’s What You Need to Know

The U.S. national debt has surpassed $37 trillion, prompting renewed debate over how to close a growing budget gap while maintaining economic stability. On July 17, Treasury Secretary Scott Bessent introduced a proposed strategy—referred to as the “One Big Beautiful Bill”—that outlines a four-part approach to funding a $3.4 trillion shortfall. The plan includes new tariffs, economic growth policies, potential Fed influence, and even the use of stablecoins to modernize debt financing.

While the proposal is bold and forward-looking in some respects, economists are voicing concerns about its feasibility and unintended consequences. The broader impact of these measures could ripple through the economy and into consumers’ wallets, especially in the current high-inflation, high-interest-rate environment.

This article examines each component of the proposal and explores what it means for your personal finances, as well as the broader economic outlook.

1. Tariffs as a Revenue Tool: Historic, but High Risk

One of the most headline-grabbing features of the strategy is a proposal to implement 30% tariffs on imports from trading partners like Mexico and the European Union. The idea is that these tariffs would generate revenue and incentivize domestic manufacturing.

Historically, tariffs did serve as a primary revenue source—before the federal income tax was introduced in 1913. However, in today’s globally interconnected economy, high tariffs often lead to higher prices for consumers and retaliatory trade measures from other countries.

For instance, past tariffs on goods like washing machines resulted in consumer price increases of up to 12%, according to a 2019 University of Chicago study. Meanwhile, affected sectors such as agriculture saw declines in exports due to foreign countermeasures. If similar tariffs are reintroduced or expanded, everyday goods from cars to electronics to groceries could become more expensive, affecting household budgets nationwide.

From a revenue standpoint, tariffs may contribute billions to federal coffers, but they also risk dampening consumption and escalating global trade tensions—both of which could undercut long-term economic growth.

2. Accelerating Growth: An Ambitious but Uncertain Path

A second pillar of the plan focuses on economic growth as a tool for reducing the debt-to-GDP ratio. The logic is that a larger economic pie makes existing debt more manageable. While this theory is widely accepted among economists, achieving above-average growth requires favorable conditions across multiple fronts.

Current GDP growth projections for 2025 hover around 2.1%, far below the 4–5% target needed to materially shift the debt landscape. Realizing such growth would demand large-scale improvements in productivity, infrastructure investment, workforce development, and business confidence—none of which can be guaranteed.

Moreover, with consumer spending already under pressure from elevated interest rates and high inflation, any plan relying heavily on growth must acknowledge that household finances are stretched, and further strain could be counterproductive.

3. Pressuring the Fed: A Threat to Independence?

Perhaps the most sensitive aspect of the strategy is the notion that policymakers may push the Federal Reserve to keep interest rates low, or even alter Fed leadership to align with fiscal objectives.

While the specifics of this idea remain unclear, even the perception of political interference with the independence of the Fed has significant implications. The central bank’s autonomy is widely viewed as critical to controlling inflation, maintaining currency stability, and preserving investor confidence.

Market reactions to perceived threats to Fed independence can include higher bond yields, currency depreciation, and even capital flight—especially in times of uncertainty. Historically, countries that blurred the line between politics and monetary policy (such as Turkey and Argentina) experienced prolonged economic instability.

Regardless of intention, signaling a shift in the Fed’s independence could lead to higher borrowing costs and increased volatility, undermining the goal of sustainable debt financing.

4. Stablecoins as Modern Funding: Innovation with Caveats

The plan’s most forward-looking element is a proposal to expand the use of stablecoins—digital tokens pegged to the U.S. dollar—for purchasing Treasury securities. This would allow the government to tap into emerging financial technology to raise capital in a modern, decentralized way.

On paper, this could open Treasury markets to younger investors and global buyers who are already familiar with digital assets. It could also enhance liquidity in public debt markets and drive innovation in how bonds are held and traded.

However, the regulatory framework for stablecoins remains underdeveloped. Issues like cybersecurity, interoperability, and counterparty risk still need to be resolved. A technical failure or collapse of a major stablecoin issuer could pose systemic risks, particularly if those digital assets become entangled with public debt.

So while stablecoins offer promise as a new tool in the Treasury’s toolkit, their use must be carefully regulated to avoid introducing instability into an already delicate system.

5. What This Means for Your Personal Finances

Whether or not this plan is enacted in full, the broader trend is clear: government debt and fiscal policy are entering uncharted territory, and the decisions made now will have ripple effects across the economy.

Here’s how consumers and households can prepare:

• Plan for higher prices on imported goods. Start adjusting your budget accordingly.

• Reconsider large purchases if interest rates remain high or rise again.

• Avoid variable-rate debt where possible, as borrowing costs could increase.

• Diversify your investment portfolio to include assets that hedge against inflation (such as TIPS, commodities, or domestic equities).

• Build up emergency savings, ideally covering 3–6 months of expenses.

• Watch for stablecoin regulation if you hold or invest in digital assets

These steps won’t solve macroeconomic challenges, but they can help you stay financially resilient in an unpredictable environment.

Looking Ahead: Innovation or Instability?

The “One Big Beautiful Bill” represents a mix of ambition and risk—it’s a sign of how seriously policymakers are treating America’s debt load, but also how willing some are to experiment with unconventional tools.

Whether this plan moves forward, is modified, or gets sidelined, it raises critical questions about how the U.S. funds its future, and whether tools like tariffs or digital assets can provide real answers without significant trade-offs.

While politics will continue to shape these conversations, the economic realities affect everyone—regardless of party lines. Higher debt, global trade shifts, and financial innovation are here to stay, and being informed is the best defense.

*Disclaimer: This blog may include AI-generated content derived from web crawling, and it features quotes from original-cited inline or public sources. The information presented is for general informational purposes only and may not reflect the most current data or information available. While we strive for accuracy, we encourage readers to verify the information from original sources or reach out to a certified financial adviser for important financial decisions.