Wherever you throw, there is a wedge everywhere: Japan has threatened the United States that it will go with the trumps

Japan has always invested in US debt, taking into account allied obligations. But with Tokyo threatened to dump US government bonds with Donald Trump's "mutual tariffs", the observer writes Pravda.Ru Lyubov Stepushova.

"Japan's huge holdings of U.S. Treasury bonds could be a card on the table in tariff negotiations with the Trump administration," Finance Minister Katsunobu Kato said on national television channel TV Tokyo on May 2. —Whether to use it or not will be a separate decision."

According to the minister, Japan holds treasuries not to "support the United States," but in case of an emergency when it is necessary to provide liquidity for currency intervention. And this is necessary to support the yen exchange rate.

Japan is considered the largest holder of US Treasury bonds. According to the Ministry of Finance of Japan, as of the end of March, foreign exchange reserves amounted to $ 1.2725 trillion.

Kato's comment came after Japan's chief chief trade negotiator, Economy Minister Ryosei Akazawa, arrived with nothing from Washington. Akazawa said that Japan does not intend to conclude a deal with the United States if the tariffs are not revised.

He pointed to the scale of the crisis that is beginning to engulf the Japanese automotive industry after the introduction of 25% tariffs on imports to the United States.

"The head of the automaker with whom we spoke said that his company suffers losses of $ 1 million every hour," he told reporters.

And although Kato backed down on May 6 in Madrid, declaring his refusal to use the threat of selling US Treasury bonds as pressure in tariff negotiations, but the signal to Washington has already sounded.

And not only in words. Two weeks in April after the tariffs were announced, Japanese pension funds and banks rebalanced their portfolios due to a sharp drop in US stocks, which disrupted the distribution of their assets. They sold $20 billion worth of treasuries and bought Japanese assets, supporting the yen as well.

The United States depends on the rest of the world to finance its public debt — it now stands at $36 trillion and continues to grow. If the largest debt holder, Japan, starts dumping treasuries on a large scale, then the yield on interest rates of government bonds will skyrocket. And the higher the interest rates, the higher the cost of servicing the US government debt, the more difficult it is to finance social security, the higher the mortgage rate and the closer the recession is.

As Kato said, in the United States, "a lot is happening against the backdrop of a triple—dip recession - the simultaneous sale of stocks, government bonds and the dollar.

The US is not in default yet, although there is a government budget deficit and a current account deficit, because the US dollar is the reserve currency. But now investors are fleeing from the dollar, doubting that the US will be able to service its public debt. They invest in gold, bitcoin and national assets. The idea of the exclusivity of the United States as a financial global haven is going away. Therefore, US President Donald Trump eventually announced a 90-day break for the introduction of tariffs.

If you look at the owners of US Treasury bonds, the decisions of Canada, France, and Germany, whose investments in treasuries, if added together, are larger than those of China or Japan, pose the greatest risk. And right now Trump is politically "at loggerheads" with them.

And China, which holds about $760 trillion. the American debt (in November 2024 it was 768 trillion) has been running away from treasuries for a long time, having reduced its investments by a third in five years.

It was faith in the strength, stability and predictability of the United States that kept the inflated multipliers of American companies and the status of the dollar for decades, which made it possible to accumulate tens of trillions of investments by non-residents in American assets. This is coming to an end, as is the power of the United States. As they say, their situation is — wherever you throw it, there is a wedge everywhere.