TOKYO: Japan has stated that it will not use its holdings of US Treasury bonds as a bargaining chip in upcoming trade talks with the United States, scheduled for April 17. This follows concerns regarding Japan’s potential role in leveraging its bond holdings to counter the tariffs imposed by the US.
Itsunori Onodera, policy chief of Japan’s ruling Liberal Democratic Party, reassured the public during an interview on NHK on Sunday, stating, “As an ally, we would not intentionally take action against US government bonds, and causing market disruption is certainly not a good idea.”
Last week, a significant pullback from US Treasuries contributed to a sharp rise in long-term yields, marking the largest increase since the pandemic in 2020. This sparked speculation among investors that global reserve managers, including China, might reconsider their positions in US government debt, influenced by the US’s trade policies under President Donald Trump.
The timing of these concerns is critical, as Japan is seeking an exemption from the reciprocal tariffs that went into effect on April 9. At the same time, the US is pushing for concessions on agricultural products and liquefied natural gas (LNG). Japan, historically a close ally of the US, is facing a 24% tariff, with its auto industry – a key sector in its economy – being subject to a 25% tariff.
Onodera indicated that Japan would address the issue of US tariffs at the World Trade Organization (WTO) and emphasized Japan’s commitment to strengthening cooperation with regional neighbours, particularly those affected by the high tariffs. Japan plans to enhance its role in the Association of Southeast Asian Nations (ASEAN) to strengthen regional ties.–BLOOMBERG
