Japan threatens to offload its $1 trillion US Treasury holdings if Trump trade talks don’t go well
Japan just pulled out the sharpest blade it’s got in the drawer — $1.13 trillion in US Treasury bonds. That’s what Finance Minister Katsunobu Kato waved in America’s face on Friday, right on national television.
Asked if Japan would ever use its role as the world’s biggest foreign holder of US government debt as a weapon in trade talks with President Donald Trump’s administration, Kato didn’t blink. He said, “It does exist as a card,” and tossed that line like a lit match. “Whether or not we use that card is a different decision.”
This wasn’t some offhand comment either. Japan has always avoided even talking about dumping Treasuries. But now, with Trump throwing around “reciprocal” tariffs like candy since April 2, Tokyo’s keeping its options open.
That tariff stunt already sent US markets into a tailspin. Treasury yields spiked, bonds got dumped, and traders panicked. After the chaos, Trump paused the tariffs for 90 days, but of course, the damage was already done.
Japan uses bond threat to push back on Trump’s tariff war
Kato’s words landed hours after Ryosei Akazawa, Japan’s top trade negotiator, wrapped up another tense meeting in Washington. He sat down with Scott Bessent, Trump’s Treasury Secretary, and other White House officials.
No details were made public, but diplomatic sources say they talked about US car imports, energy, and agriculture deals. The trade surplus with the US is a long-time sore spot, and Trump wants it cut—fast.
The Japanese side might consider buying more American gas and farm goods. But that’s not happening without a fight. Kato, who met Bessent personally in the last week of April, is one of the key guys in this whole thing. And he’s clearly had enough.
Analysts are calling it what it is: a warning shot. Nicholas Smith, chief Japan strategist at CLSA, said, “This is a street fight. Promising not to use one of your strongest, most brutal weapons would be both naive and reckless.
