Surprisingly, a financial bill backed by US President Donald Trump could add $3 trillion to the national debt. An average American must be baffled by this staggering figure.

The bill, currently under review in the US Senate, may further swell the already massive national debt and worsen the federal budget deficit, which is already elevated. Analysts at UBS are confident of this outcome.

Lawmakers on Capitol Hill are actively debating the so-called One Big Beautiful Bill Act, a package of initiatives supported by President Trump. It includes tax cuts alongside increased spending on defense and immigration control.

According to estimates by the Congressional Budget Office (CBO), the measure could add more than $3 trillion to the US national debt, which currently stands at $36.2 trillion, over 120% of the country’s GDP.

The CBO also noted that under the current provisions of the bill, the budget deficit would rise to 7% of GDP by 2027, up from 6.4% in 2024. The US House of Representatives has already approved its version of the bill, while the Senate must still pass its own amendments.

This backdrop has alarmed many investors, who are increasingly concerned about the level and trajectory of the US federal debt. As a result, the term premium on long-term US Treasury bonds has been raised. It is the additional yield investors demand to hold long-dated government debt.

“Concerns over US national debt also cause a headache for equity investors, especially given the potential impact on financing costs and future tax levels,” UBS analysts note.

At the same time, market participants remain confident that America can manage its humongous debt load, citing “the strong credibility of the Federal Reserve” and the US dollar’s status as the global reserve currency, which “safeguards the country’s ability to service its debt.”

Of course, there are reasons for optimism, but UBS experts caution against excessive euphoria:  “Undoubtedly, a sound trade and tariff policy must balance revenue risks and recession threats. Productivity gains driven by AI, investment in energy infrastructure, and favorable demographic trends are essential to stimulate GDP growth and stabilize or reverse the debt trajectory.”