Japan’s finance minister has suggested that the country’s massive holdings of US Treasuries could be a bargaining chip in trade talks with the Trump administration. During a news show on national broadcaster TV Tokyo, Finance Minister Katsunobu Kato referred to these holdings as “a card on the table.” However, he clarified that whether Japan chooses to use this option or not would depend on separate negotiations.
Japan is the largest foreign holder of US government debt, with $1.13 trillion in holdings as of late February. China is the second-largest foreign investor in Treasurys. Kato emphasized that various factors will be discussed during talks with Trump, and a promise not to sell Treasurys could help secure a favorable agreement for Japan.
The Trump administration has disrupted decades of trade policies, imposing tariffs on key security allies like Japan. A team of Japanese officials met with US officials in Washington this week to discuss the tariffs. The US is set to impose 25% tariffs on imported vehicles and auto parts, along with an overall 10% baseline tariff, which could harm Japan’s weakening economy.
Some analysts are concerned that Asian governments could liquidate their US Treasury holdings as trade tensions escalate. Recent spikes in US government bond yields have raised worries about the safety of these assets due to Trump’s tariff policies.
Source: https://apnews.com/article/japan-treasurys-trump-tariffs-44b9b37bf7a290701201322f69bade2e