China has been warned against selling its mass holdings of US government bonds in retaliation to President Trump’s tariffs lest it backfire on its own currency and economy.
Analysts have been poring over data on foreign holdings of US treasuries — debt issued by the US government — which have suffered an unprecedented fall in price as a result of Trump’s tariffs on China and the rest of the world. Bond yields, which reflect the issuing government’s borrowing costs, rise when the price of the asset falls.
China is subject to a 145 per cent tariff on its goods exports to the United States, a development announced this month that has stoked speculation that Beijing could retaliate by reducing its US bond holdings in an attempt to put pressure on the Trump administration.
China sold about $5 billion in US bonds two months before President Trump’s “liberation day” tariff announcement in the rose garden of the White House
ABE…
