Japan's finance minister calls US Treasury holdings 'a card' in tariff talks with Trump

Japan's massive holdings of U.S. Treasurys can be "a card on the table" in negotiations over tariffs with the Trump administration, Finance Minister Katsunobu Kato said Friday.

"It does exist as a card, but I think whether we choose to use it or not would be a separate decision," Kato said during a news show on national broadcaster TV Tokyo.

Kato did not elaborate and he did not say Japan would step up sales of its holdings of U.S. government bonds as part of its talks over President Donald Trump's tariffs on exports from Japan.


Earlier, Japanese officials including Kato had ruled out such an option.

Japan is the largest foreign holder of U.S. government debt, at $1.13 trillion as of late February. China, also at odds with the Trump administration over trade and tariffs, is the second largest foreign investor in Treasurys.

Kato stressed that various factors would be on the negotiating table with Trump, implying that a promise not to sell Treasurys could help coax Washington into an agreement favorable for Japan.

Trump has disrupted decades of American trade policies, including with key security allies like Japan, by i mposing big import taxes, or tariffs, on a wide range of products.

A team of Japanese officials was in Washington this week for talks on the tariffs.

The U.S. is due to soon begin imposing a 25% tariff on imported vehicles and auto parts, as well as an overall 10% baseline tariff. The bigger tariffs will hurt at a time when Japanese economic growth is weakening.

Asian holdings of Treasurys have remained relatively steady in recent years, according to the most recent figures.

But some analysts worry China or other governments could liquidate their U.S. Treasury holdings as trade tensions escalate.

U.S. government bonds are traditionally viewed as a safe financial asset, and recent spikes in yields of those bonds have raised worries that they might be losing that status due to Trump's tariff policies.