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4mo ago

Japan Signals US Treasury Holdings as Possible Leverage in Trade Talks

Finance Minister Kato suggests Japan's $1 trillion Treasury portfolio could be a negotiation tool, marking a shift in stance amid ongoing US trade tensions.

FILE - Ryosei Akazawa, newly appointed Minister in charge of Economic Revitalization, arrives at the prime minister's office Tuesday, Oct. 1, 2024, in Tokyo. (AP Photo/Hiro Komae)
Japanese prime minister Shigeru Ishiba, seen here at a NATO press conference last month, warned there was no breakthrough in talks with the Trump administration. "We have not yet reached a point where common ground has been found,” he told reporters on Friday.
A woman walks past a chart in Japan showing interest rates. Photo: Kazuhiro Nogi/AFP via Getty Images
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Overview

  • Finance Minister Katsunobu Kato stated Japan's $1 trillion-plus US Treasury holdings could be considered as leverage in trade negotiations with the United States.
  • Kato emphasized that the primary purpose of these holdings is to maintain liquidity for yen interventions but acknowledged they might serve as a negotiation tool.
  • This marks a departure from Kato's earlier position, where he ruled out using Treasury holdings in trade discussions.
  • The global sell-off in US Treasuries following President Trump's April tariffs has heightened focus on Japan's and China's significant debt holdings.
  • The next round of US-Japan trade and economic security talks is scheduled for mid-May, with Treasury holdings likely to remain a key discussion point.