The deepening of President Donald Trump‘s trade war with China could push the country—the second-largest holder of U.S. debt—to dump its Treasury holdings, sending mortgage rates skyrocketing for millions of Americans.
While some experts believe that such an escalation is unlikely to happen, China’s President Xi Jinping has promised to “fight” the Trump administration’s escalation of tariffs “to the end”—and there is a chance he might do so through a very dangerous weapon the country has in its arsenal: more than $760 billion in holdings in U.S. Treasury securities.
Why It Matters
While backing away from other levies on individual countries beyond the 10 percent baseline tariff on all imports to the United States announced earlier this month, Trump has imposed 145 percent tariffs on Chinese goods. China has retaliated with its own 125 percent tariffs on imported American goods.
As tensions grow between the two nations over a…
