The United States is the world’s largest economy and the issuer of the global reserve currency, the U.S. dollar. As such, it has the financial capacity and the incentive to lend money to many foreign countries, institutions, and companies. The U.S. also holds foreign debt as a form of investment diversification and as a result of trade agreements.
But which countries owe the most money to the U.S.? According to the latest report of the U.S. Department of the Treasury, which was released in October 2023, the U.S. owns a total of $9.46 trillion in foreign securities, including $6.76 trillion in equity and $2.70 trillion in debt. This debt can come from foreign governments, institutions, or companies, so most of these debts are not exactly a country’s debt.
Top 10 Countries That Owe the U.S. Money in 2023
However, based on the available data, we can rank the top 10 countries that owe the most money to the U.S. as of the end of 2023. Here they are:
10. Luxembourg
We begin this list with the small European country of Luxembourg, which owes the U.S. about $87 billion. In total, the country has total external debt of about $10.06 trillion, which is more than 200 times its gross domestic product (GDP). Luxembourg is a major financial center and hosts many multinational corporations and banks.
9. India
India is the second-most populous country in the world and one of the fastest-growing economies. It owes the U.S. about $232 billion, which is about 8% of its GDP. India’s total external debt is about $625 billion, which is mostly denominated in U.S. dollars and other foreign currencies. India’s main creditors are multilateral institutions, such as the World Bank and the Asian Development Bank, as well as bilateral creditors, such as Japan and China.
8. Taiwan
Taiwan is a self-governing island that China claims as its territory. It owes the U.S. about $235 billion, which is about 40% of its GDP. Taiwan’s total external debt is about $287 billion, which is mostly short-term and related to its trade activities. Taiwan is a major exporter of electronics and machinery and has a large trade surplus with the U.S.
7. Ireland
Ireland is a small European country that is part of the European Union (EU) and the eurozone. It owes the U.S. about $253 billion, which is about 60% of its GDP. Ireland’s total external debt is about $2.5 trillion, which is more than 500% of its GDP. Ireland is a popular destination for foreign direct investment, especially from U.S. companies, due to its low corporate tax rate and skilled workforce.
6. Canada
Canada is the second-largest country in the world by area and one of the closest allies of the U.S. It owes the U.S. about $254 billion, which is about 9% of its GDP. Canada’s total external debt is about $2 trillion, which is about 75% of its GDP. Canada’s main creditors are other countries, such as Japan and China, as well as international organizations, such as the International Monetary Fund (IMF) and the Bank for International Settlements (BIS).
5. Cayman Islands
The Cayman Islands are a British overseas territory in the Caribbean Sea that are known for their offshore financial services and tax haven status. They owe the U.S. about $285 billion, which is more than 4,000 times their GDP. The Cayman Islands’ total external debt is unknown, but it is estimated to be very high due to their role as a conduit for international capital flows.
4. Switzerland
Switzerland is a small landlocked country in Central Europe that is famous for its neutrality, banking sector, and high standard of living. It owes the U.S. about $291 billion, which is about 35% of its GDP. Switzerland’s total external debt is about $1.8 trillion, which is more than 200% of its GDP. Switzerland’s main creditors are other countries, such as Germany and France, as well as private entities, such as banks and corporations.
3. United Kingdom
The United Kingdom (UK) is a constitutional monarchy that consists of England, Scotland, Wales, and Northern Ireland. It owes the U.S. about $668 billion, which is about 23% of its GDP. The UK’s total external debt is about $9.6 trillion, which is more than 300% of its GDP. The UK’s main creditors are other countries, such as the U.S. and Japan, as well as international organizations, such as the IMF and the EU.
2. China
China is the most populous country in the world and the second-largest economy after the U.S. It owes the U.S. about $859 billion, which is about 6% of its GDP. China’s total external debt is about $2.5 trillion, which is about 18% of its GDP. China’s main creditors are other countries, such as Japan and Germany, as well as private entities, such as banks and corporations.
1. Japan
Japan is an island nation in East Asia that is the third-largest economy in the world and the largest foreign holder of U.S. government debt. It owes the U.S. about $1.1 trillion, which is about 20% of its GDP. Japan’s total external debt is about $3.6 trillion, which is about 65% of its GDP. Japan’s main creditors are other countries, such as China and the U.S., as well as domestic entities, such as banks and pension funds.
Conclusion
The U.S. is not only the world’s largest debtor but also the world’s largest creditor. It lends money to many foreign countries, institutions, and companies, mostly in the form of securities, such as stocks and bonds. The top 10 countries that owe the most money to the U.S. are mostly developed and economically stable countries that have strong trade and investment ties with the U.S.
However, these debts are not necessarily a sign of weakness or dependence on the part of the borrowers, nor a sign of strength or dominance on the part of the lender. They are rather a reflection of the complex and interdependent nature of the global financial system, where money flows across borders for various purposes and benefits both parties involved.