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America’s trading partners have a massive bazooka in the trade war. They may never use it

  • A longtime U.S. Ally, Japan, recently hinted at using its $1.1 trillion holding of U.S. Treasuries as leverage in trade negotiations in 2025.
  • This suggestion followed heightened trade tensions and U.S. Tariffs, but Japan quickly clarified it was not actively considering selling U.S. Debt.
  • Experts emphasize that dumping Treasuries would likely backfire on Japan by causing financial losses, destabilizing markets, and raising U.S. Borrowing costs.
  • If Japan sold large amounts of U.S. Debt, Treasury rates would spike, disrupting global markets, and investors would react with concern over the $36 trillion U.S. Debt burden.
  • The episode exposes the fragile reliance of the U.S. On foreign debt buyers and suggests that while nations consider all options, a large Treasury selloff remains unlikely.
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Article19 broke the news in Rabat, Morocco on Saturday, May 3, 2025.
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