- No country holds more provable Treasury debt than Japan with roughly $1.1 trillion, equivalent to a quarter of its entire economy. Since dumping U.S. sovereign bonds would severely hurt both Japan and the United States, investors view the threat as a psychological tactic to exert pressure as the clock ticks down on Trump’s 90-day tariff pause.
Call it the nuclear option—a last resort that could unleash mutually assured financial destruction for two allies joined at the hip. Japan is prepared to use its role as America’s single largest creditor as a bargaining chip in ongoing trade negotiations with the Trump administration.
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