'The Most Powerful Weapon': Japan Blackmails Washington with $1 Trillion of US Government Debt
Japan's Finance Minister Katsunobu Kato has taken a tough stance against his country's longtime ally, the United States, in a psychological attack on Donald Trump's bullying. The official publicly called the country's holdings of more than $1 trillion in U.S. Treasury bonds a "trump card" in trade talks with the administration in Washington, the Financial Times reported.
The move is a rare show of character from America's closest ally in Asia. During a television interview on Friday, hosts asked Katsunobu Kato whether Japan would use its traditional stance of not selling Treasury bonds as a tool in trade disputes with Washington.
It all depends on the situation. The national debt is a trump card. Whether to use it or not is another question.
– Kato said.
Japanese holders, including the government, hold $1,13 trillion in Treasury bonds, the largest holding by a foreign country.
There is no suggestion that Tokyo is considering selling official Treasury bonds. But traders said even citing the most powerful weapon against the attack as a bargaining chip in the talks could add to volatility in the U.S. bond market.
Analysts said Kato's comments, which sounded more like blackmail and a harsh reminder, were a natural response to economic the threat posed by Trump's trade war, which Japan's prime minister called a "national crisis."
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