A Japanese official issued a veiled threat amid trade talks with the Trump administration, then said the threat was merely a hypothetical conversation.
As with most foreign countries that do business with the United States, Japan has been in talks with Trump administration officials after President Donald Trump announced tariffs on imports. Some have called the tariffs a disaster for Japan.
On Friday, Japan’s finance minister said that Japan’s status as the largest holder of Treasury securities could be a tool in the talks, in what the Financial Times called a “rare baring of teeth by America’s closest ally in Asia.”
The reciprocal tariffs imposed by the United States are a national disaster for Japan.美国的对等关税对日本来说是国难。 pic.twitter.com/BIyJaXzfga
— 雁过留声 (@szygls) April 15, 2025
Finance Minister Katsunobu Kato was asked whether Japan would continue to hold its position of not selling its Treasury notes. The U.S. Treasury issues notes to cover the cost of borrowing to keep the country operating.
“It does exist as a card,” Kato said.
Kato added, “Whether or not we use that card is a different decision.”
Japan urges U.S. to scrap 25% auto tariffs as Ishiba rejects partial trade deal, insists on full rollback
Source: Reuters | #Japan #USA #Ishiba #DonaldTrump #TradeDeal #Tariffs pic.twitter.com/UOZVOuQkAW
— News18 (@CNNnews18) May 4, 2025
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Japan’s official and private bond holders own $1.13 trillion of Treasury notes.
One commentator said Japan does not have to carry through on its threat to make it effective.
“This is a street fight: Promising not to use one of your strongest, most brutal weapons would be both naive and reckless,” said Nicholas Smith, chief Japan strategist at CLSA.
“You don’t need to use the weapon, just brandish it,” he said.
Japanese Prime Minister Ishiba said today that if US tariffs on steel, aluminum, and automobiles are applied to Japan, it will become “difficult” for Japanese companies to invest in the US.
Last month Ishiba told Trump to expect $1 trillion in new Japanese investments… pic.twitter.com/TyiQn1hE5c— Jeffrey J. Hall 🇯🇵🇺🇸 (@mrjeffu) March 6, 2025
In a follow-up comment, Kato indicated that might just be Japan’s strategy.
“My comments were made in response to a question whether Japan could, as a bargaining tool in trade negotiations, explicitly reassure Washington it wouldn’t sell its Treasury holdings easily,” Kato said, according to Reuters.
Tokyo’s envoy for U.S. tariff talks said Saturday after a second round of negotiations that Japan was insisting Washington review all the levies as a precondition to a trade deal. https://t.co/rE2c93k3rj
— The Japan Times (@japantimes) May 3, 2025
Japan and the U.S. are in the midst of trade talks, with the key issue the imposition of tariffs on Japanese-made vehicles, according to Bloomberg.
Japan’s chief trade negotiator Ryosei Akazawa has indicated a deal could be reached in June.
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