Singapore's Lianhe Zaobao reported today (May 2nd): "Japan's Finance Minister Kato Katsunobu said that Japan's held US Treasury bonds could be a bargaining chip in the trade negotiations between the two countries, but whether to use it is another matter."

Kato Katsunobu was asked on Friday (May 2nd) during a Tokyo TV program if Japan not selling its held US Treasury bonds could be used as a negotiation tool. He replied: "We do indeed hold a card. Whether or not we choose to use this card is another matter."

Kato Katsunobu also emphasized that Japan's holding of US Treasury bonds was not done specifically to support the United States.

After Trump announced retaliatory tariffs on April 2nd, US Treasury bonds experienced historic large-scale sell-offs, with many speculating that China was behind it. It was later confirmed that Japan had sold US Treasury bonds, which put significant pressure on Trump. On April 9th, Trump announced a 90-day suspension of tariffs on all countries except China to facilitate trade negotiations.

A few comments: As the largest overseas creditor of the United States, Japan holds nearly $1.07 trillion in US debt, and its bond trading activities have a significant impact on the US Treasury market. Previously, Japan had been selling US Treasury bonds for two consecutive months. With the uncertainty increasing due to the concentrated maturity and refinancing pressure on US Treasury bonds in May-June, Japan's held US Treasury bonds are indeed a weighty negotiation chip. Kato Katsunobu emphasized that holding US Treasury bonds was not to support the United States, and now mentioned that they might be used as a negotiation chip, indicating that Japan is attempting to take the initiative in trade negotiations and change its relatively weak position in the Japan-US relationship, no longer easily compromising with the United States.

Although Japan previously denied large-scale sales of US Treasury bonds, various signs suggest that it has expressed dissatisfaction and resistance through selling US Treasury bonds, forcing Trump to soften his stance on the tariff issue, thereby gaining negotiation confidence.

However, Japan faces a dilemma: while selling US Treasury bonds can exert pressure on the United States, it also faces risks such as contraction of US Treasury bond credit and asset depreciation, and the Japan-US alliance system remains very important to Japan. Therefore, Kato Katsunobu also stated that whether to use this chip needs careful consideration. The subsequent development of Japan-US trade negotiations and how Japan balances maintaining its own interests and maintaining the alliance relationship deserve attention.

Original article: https://www.toutiao.com/article/1830986929677507/

Disclaimer: This article solely represents the author's viewpoint.