Japan threatens to offload its $1 trillion US Treasury holdings if Trump trade talks don’t go well

Japan just pulled out the sharp blade it got in the drawer – $ 1.13 trillion on US treasury bonds. That was what finance minister Katsunobu Kato urged on the face of America on Friday, on the national television.

Asked if Japan would use its role as the largest foreigner with a foreigner in the US government debt as a weapon in speaking of trade with the President Donald Trump, Kato did not blink. He said, “it exists as a card,” and thrown the line like a lit match. “Whether we use that card is a different decision.”

Nor is it some offhand comment. Japan always avoids even talking about disposing of treasures. But now, with Trump dumping around the “reward” tariffs like Candy since April 2, keeping its choices open.

That tariff stunt sent us markets to a Tailspin. Treasury's yields were spitting, the bonds were thrown away, and the merchants were in shock. After the excitement, Trump stopped the tariffs for 90 days, but of course, the injury was over.

Japan uses a bond threat to push back to Trump's tariff war

Kato's words arrived at the time after Ryosei Akazawa, Japan's leading trade businessman, wrapped another tense meeting in Washington. He sat with Scott Bessent, Trump's treasury secretary, and other White House officials.

No details have been made public, but diplomatic resources say they are talking about US car imports, energy, and agricultural deals. Excessive trade in the US is a long -sore spot, and Trump wants to cut it off.

The Japanese side can consider buying more American and farm belongings. But that doesn't happen without a fight. Kato, who was met by Bescent in person in the last week of April, was one of the main men in this whole thing. And it was clear that he had enough.

Analysts call it what it is: a shot shot. Nicholas Smith, Chief Japan Strategist at CLSA, Says“It's a street fight. Promises not to use one of your strongest, most brutal weapons are both naive and reckless. You don't have to use the weapon -just brandish it.” And that's exactly what Kato did.

It's also not about Japan. If China, who also holds a mountain of treasures, would jump with a similar threat, the US bond market would have been scacrewed. Between the stash of Japan and China's, the action is true. In Japan leading the charge today, they opened the door to something bigger.

Japan's Prime Minister has called Trump's trade war a “national crisis.” Kato picks up this public only shows how he and his top boys are fed. Jesper Koll, director of the Moneyx Group, called the shocking motion, especially from someone who was careful of Kato.

“The fact that the average over -guarding and diplomatic financial minister spoke on the national TV about the righteousness of Japan's biggest owner in dealing with America has proven the growing confidence of Japan's elite confidence in their deal with the US,” Koll said.

The negotiations between Akazawa and the Trump team are expected to be ramp to May, with a possible table deal by June. But Japan is now fighting the sharp elbow. They are not just asking for “fairness.”

They say: Hold us again, and we torment the bond market.

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