‘It could be among such cards’: Japan signals US Treasury holdings could be trade bargaining chip with Donald Trump

Japan’s finance minister Katsunobu Kato has for the first time publicly floated the possibility of using the country’s vast US Treasury holdings, worth over $1 trillion, as a potential card in ongoing trade negotiations with Washington, reported Reuters.
In a televised interview on Friday, Kato said the primary purpose of holding such large amounts of US government debt was to ensure Japan has enough liquidity for yen intervention if needed.
However, when asked if the holdings might be used as a bargaining chip in trade talks with the US, Kato acknowledged, “We obviously need to put all cards on the table in negotiations. It could be among such cards.” He quickly added, “Whether we actually use that card, however, is a different question.”
Kato’s remarks mark a shift from his previous stance last month when he ruled out using Japan’s Treasury holdings in trade talks. The comments come after April's global sell-off in US Treasuries, which followed US President Donald Trump’s decision to impose sweeping tariffs on trade partners, including Japan.
According to news agency Reuters, the sell-off and its market disruption may have influenced Washington’s tone in bilateral talks.
While Kato declined to say whether the Treasury issue was directly discussed with US treasury secretary Scott Bessent during recent meetings, he noted that market developments “likely affected Washington’s approach” in the dialogue.
Despite being one of Washington’s closest allies, Japan's enormous presence in the US bond market gives it strategic weight. Analysts believe Japan, which relies heavily on exports to the US, particularly in automobiles, has limited leverage outside of financial markets.
“Playing the card early, while the US bond market is in the minds of the administration after recent weeks, is a smart move,” said Martin Whetton of Westpac, quoted by Reuters. “They don’t have to do anything. But they can put themselves in a solid position to negotiate.”
Naka Matsuzawa, chief macro strategist at Nomura, was quoted by Reuters that Japan’s Treasury stockpile “should be a card if not an ace card for the negotiation,” especially amid tensions over currency rates. Though Kato said there was no discussion on specific exchange rate targets with Bessent, Tokyo has been under pressure from Trump, who accused Japan of weakening the yen to gain a trade advantage, an allegation Japan denies.
Japan’s trade envoy Ryosei Akazawa also said Thursday’s talks in Washington were “frank and constructive” and confirmed a third round is expected in mid-May.
Speaking to reporters, he said both sides discussed tariffs, non-tariff measures, and economic security. “We were able to advance concrete discussions,” said Akazawa, according to news agency AFP.
Despite no breakthroughs yet, Japan has stressed it is "firmly defending" its interests. “We don’t keep (the Treasury holdings) to support the US,” Kato reiterated on TV Tokyo. “We will intervene if our country is in trouble.”