Japan could use its $1 trillion-plus holdings of U.S. Treasuries as a card in trade talks with Washington, its finance minister said on Friday, raising explicitly for the first time its leverage as a massive creditor to the United States, Reuters reported.
While Finance Minister Katsunobu Kato did not threaten to sell holdings, his remarks touch on a critical concern global investors have about what Japan and China, the two largest owners of U.S. government debt, might do in seeking tariff concessions from the Trump administration.
The Treasury market saw a huge global sell-off last month after U.S. President Donald Trump's decision on April 2 to slap sweeping tariffs on trading partners, including key strategic allies such as Japan.
Kato said in a television interview the primary purpose of Japan's U.S. Treasury holdings - the largest in the world - is to ensure it has sufficient liquidity to conduct yen intervention when necessary, according to Reuters.
