The trade war between the world’s two largest economies is heating up, putting $650 billion in goods and services at stake.

After United States President Donald Trump announced a 34 percent tariff on China during his “Liberation Day” speech on April 2, the Chinese Communist Party retaliated by hiking its tariffs on U.S. imports to 84 percent. The resulting volatility caused the stock market and the bond market to tank, prompting President Trump to pause reciprocal tariffs on most countries for 90 days. This pause does not include China, however, which now faces a 145 percent tariff.

China’s Commerce Ministry vowed to “fight to the end” if the U.S. continues to escalate its trade war with the Chinese Communist Party, prompting many financial analysts to speculate about China’s infamous “nuclear option.”

Since China is the second-largest holder of U.S. debt, it has the ability to deal a seismic blow to the U.S. economy by selling $761 billion worth of U.S. treasury bonds. This would drive up U.S. government borrowing costs and cause the value of the dollar to plummet in a highly destabilizing move. Granted, this might hurt China more than it hurts the U.S., but national leaders do not always act rationally in volatile times. Trade wars can get nasty as emotions flare.

It is hard to estimate just how much the value of the dollar would plummet in such a scenario, but treasury bond spikes are easier to predict. The Council on Foreign Relations believes bond rates would spike by 0.3 percentage points if China triggered its nuclear option. That may not sound like much, but considering that the U.S. needs to sell $11.1 trillion worth of treasury bonds this year to pay the minimum balance on its debt and finance its new deficit, even a 0.3 percentage point increase would mean an additional $33 billion worth of interest payments on America’s $36 national debt.

The U.S. is expected to pay approximately $952 billion in net interest on its national debt in fiscal year 2025, so such an increase would push the total cost of servicing the national debt to nearly $1 trillion. In and of itself, such a move would not bankrupt the U.S., but it would deal a major blow to the dollar’s status as the world reserve currency.

This would be a major problem. The main reason banks keep lending America money at low interest rates is that the dollar is the world’s dominant reserve currency. If this ceased to be the case, demand for U.S. treasury bonds would tank and the U.S. government would have to offer much higher rates of return to get people to buy them. This would make interest on the national debt a much bigger portion of the federal budget than it currently is.

Congressional budget projections estimate that by 2044 the government will be spending more on interest than on everything else except mandatory entitlements (i.e. Social Security, Medicare, Medicaid, etc). Yet these projections assume that the average yield of a 10-year treasury bond will remain below 4.6 percent. America’s interest payments will exceed discretionary spending much sooner if interest rates rise above this threshold.

Rising treasury bond rates will force America to raise taxes dramatically or start printing its way into hyperinflation. The era of easy money will die alongside the dollar’s reserve currency status. This is why China’s nuclear option is dangerous.

For perspective, compare the government to a household. Slash seven zeros from the official figures, and it is like a well-to-do family that earns $490,000 a year—yet spends $680,000. This family put a staggering $180,000 on its credit card last year, even though it already had $3.6 million in credit card debt. It pays $90,000 a year in interest, and it no longer pretends to have a plan to pay off its debts. A bond market crisis is like a letter from Master Card informing you that your credit card rate just went up. That’s bad news when one fifth of your take-home pay already goes to interest.

Trumpet editor in chief Gerald Flurry writes in Daniel Unlocks Revelation:

When the United States became the world’s leading creditor nation after World War I, the U.S. dollar became the world’s ruling currency. But now the U.S. is the world’s leading debtor nation. Nations are working to find an alternative to the dollar and are starting to dump their dollar holdings and buy gold, euros, yuan and other currencies. Once the demand for the dollar declines, U.S. creditors will demand higher interest rates, which will make America’s already staggering debt far worse.

Politicians may implement policies to delay economic collapse, but they are doing nothing to reverse this nation-destroying trend. The massively debt-burdened American economy simply cannot continue indefinitely.

How long will America’s economic Armageddon be delayed? Until God’s work is finished. Then God will protect His people who are doing that work.

President Trump’s trade war might bring some industry back to America, but the demand for dollars is declining, and nations are starting to demand higher interest rates. This will make America’s already staggering debt far worse and prompt the nations of Europe to unite into a resurrected Holy Roman Empire.

The only thing that might prevent this nightmare scenario is a dramatic reduction in America’s debt-to-gross domestic product ratio, but American leaders are making no progress toward this goal. They cannot make progress until there is an improvement in the character of the American people. We have to change our approach to finance if we want to avoid enslavement.

To learn more, read “Eliminating the Need for the Dollar.”