Bridgetown, Barbados – Japan has overtaken China as the largest foreign holder of U.S. government debt, now owning approximately $1.1 trillion in U.S. Treasury securities. The shift, while seemingly distant, has real implications for economies like Barbados, which are deeply tied to the U.S. through tourism and trade.
Foreign nations hold around 25% of the United States’ $34 trillion national debt, with Japan and China leading the pack. If either were to significantly reduce their holdings, analysts warn it could trigger higher U.S. interest rates, a weaker dollar, and ripple effects in global markets.
“A weakened U.S. economy or dollar could mean fewer American tourists and higher import costs,” says a leading economist. “Barbados, with its dollar pegged to the U.S. and heavy dependence on tourism, would feel the pressure almost immediately.”
For Barbados, the stakes are high.
The U.S. remains Barbados’ largest source of tourists, accounting for nearly 1 in 3 visitors. Any dip in American travel or spending power could impact everything from government revenue to job stability in the hospitality sector.
Local experts say the situation underscores the need for diversification of both tourism markets and economic sectors, as global financial shifts continue to affect small island economies in outsized ways.