Japan Sends a Strong Warning to the U.S.: Don’t Push Us Too Far
Japan has made a bold move. Finance Minister Katsunobu Kato went on national TV and hinted at using Japan’s $1.13 trillion stash of U.S. Treasury bonds as leverage in trade talks with the U.S.
When asked if Japan might use its position as America’s biggest foreign creditor to push back against U.S. trade demands, Kato didn’t hold back. “It does exist as a card,” he said calmly. His words sent shockwaves through financial markets.
This wasn’t a casual comment. Japan has always avoided even suggesting it might sell U.S. debt. But after months of U.S. threats over tariffs, Japan is no longer staying quiet.
Earlier U.S. tariff warnings had already rattled Wall Street, causing bond prices to drop and markets to panic. Though the U.S. later delayed the tariffs for 90 days, the tension remains.
Japan’s Message: We Won’t Back Down
Kato’s statement came just after Japan’s top trade negotiator, Ryosei Akazawa, returned from tough talks in Washington. Reports say the discussions were tense, with clashes over car imports, energy deals, and farm goods.
Japan may agree to buy more U.S. products, but it won’t give in without a fight. Kato, who met with U.S. officials in April, seems to have had enough.
Market experts agree. Nicholas Smith from CLSA said:
“This is a street fight now. If you have a weapon, you show it. You don’t have to use it—just letting the other side know is enough.”
The bigger risk? If China—another major holder of U.S. debt—joins Japan in this strategy, the bond market could crash. Together, Japan and China have enough power to pressure the U.S.
Japan’s Prime Minister has called Trump’s trade war a “national crisis.” So when a usually calm finance minister like Kato speaks this boldly, it’s serious.
Jesper Koll from Monex Group put it best:
“When Japan’s finance minister talks openly about U.S. debt holdings, it’s not just a warning—it’s a signal that Japan is done being pushed around.”
Trade talks will continue in May, with a possible deal by June. But one thing is clear: Japan isn’t asking for fairness anymore—it’s setting limits. If the U.S. pushes too hard, Japan could shake the global bond market.
