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Investing.com-- Japanese Finance Minister Katsunoby Kato said on Friday that the country’s massive pile of U.S. Treasury holdings were among the tools it could use in trade negotiations with the United States.
But Kato specified that whether the country would actually consider using them to negotiate was a different issue.
His comments- made during a television programme- came as top-level Japanese and U.S. officials met in Washington for a second round of bilateral trade talks.
Kato noted that the main purpose of Japan’s Treasury holdings- which are over $1 trillion and the largest in the world- was to ensure it had sufficient liquidity to support the yen through intervention.
“But we obviously need to put all cards on the table in negotiations. It could be among such cards,” Kato said, according to comments carried by Reuters. “Whether we actually use that card, however, is a different question.”
His comments mark a sharp reversal from last month, when Kato dismissed the prospect of using Treasury holdings in trade negotiations.
U.S. Treasuries saw a sharp sell-off in the wake of U.S. President Donald Trump’s reciprocal tariffs in early-April, which sparked heightened concerns over the U.S. economy.
But the Treasury sell-off was one of the key motivations behind Trump announcing a 90-day pause in his reciprocal tariff plan.
The dollar was also nursing steep declines in April, as Trump’s constant flip-flopping on his tariff agenda dampened investor faith in the world’s biggest economy.
Japan faces 24% tariffs under Trump’s agenda, which the country has decried. While the 24% tariffs are postponed until at least July, Japan still has to contend with a 10% universal tariff, and a 25% duty on automobiles, a key export to the United States.