By Emmanuel Nduka
The United States’ national debt has surpassed $40 trillion for the first time, reaching about $40.047 trillion on August 18, according to the U.S. Treasury Department.
The historic turnout comes less than five months after the debt crossed the $39 trillion mark in March, and about 10 months after it surpassed $38 trillion. The gross figure includes about $32.3 trillion in debt held by the public and $7.8 trillion in intragovernmental holdings.
But the extraordinary figure raises another question of who exactly is America borrowing all this money from. The answer is more complicated than simply pointing to China.
According to the Congressional Budget Office (CBO), the U.S. Treasury borrows by selling government securities to a wide range of buyers, including American investors, the Federal Reserve, mutual funds, financial institutions, individual investors, private investors overseas and foreign central banks.
A substantial portion is therefore held within the United States. The CBO has noted that domestic investors account for the majority of debt held by the public, meaning that much of Washington’s borrowing is ultimately financed through America’s own financial system.
Foreign investors, however, remain major holders of U.S. government debt.
According to the latest U.S. Treasury data reported by Reuters, foreign investors held $9.299 trillion in U.S. Treasury securities in June 2026, down from $9.371 trillion in May.
Japan is currently the largest foreign holder, with about $1.116 trillion in U.S. Treasuries, according to the Treasury data. The United Kingdom is second with about $939.9 billion, while China is third with approximately $633.4 billion.
China’s position is particularly noteworthy. Beijing’s Treasury holdings was recently reported to have fallen by 4 per cent in June to their lowest level since September 2008 and were down by more than 13 per cent compared with a year earlier.
That means the widely held perception that China is America’s biggest creditor is no longer correct. Japan now holds substantially more U.S. Treasury securities than China.
The United Kingdom’s position also requires some caution. Reuters noted that Britain is a major custody hub for global investors, meaning securities attributed to the UK in Treasury statistics may not necessarily represent investments ultimately owned by the British government or British citizens.
And the $9.299 trillion held by foreigners represents only a portion of America’s publicly held debt. The rest is held largely by domestic investors and institutions.
The CBO explains that U.S. government securities are held by entities ranging from the Federal Reserve and mutual funds to financial institutions and individual Americans, alongside foreign investors and central banks.
The distinction matters because America does not owe the entire $40 trillion to foreign countries. Gross national debt also includes money the federal government owes to its own trust funds and other government accounts.
According to the Center on Budget and Policy Priorities, gross debt combines debt held by the public with Treasury securities held by U.S. government trust funds and other federal accounts.
America is borrowing from Americans, U.S. financial institutions, the Federal Reserve, foreign investors and foreign governments. Among foreign holders, Japan is currently the biggest, followed by the United Kingdom and China, as earlier explained.
The $40 trillion milestone is therefore less a story about America being indebted to one foreign power and more a reflection of a vast borrowing system in which domestic and international investors continue to buy U.S. government securities.
