Us Treasury Secretary: Weaponization of US debt makes no sense for China
The Trump administration plans to use the ongoing tariff negotiations to pressure its trading partners to limit their dealings with China.
U.S. officials plan to negotiate with more than 70 countries to ask them not to allow China to ship goods through their countries, to prevent Chinese companies from setting up on their territory to avoid U.S. tariffs, and not to absorb cheap Chinese industrial goods into their economies.
One of the masterminds behind the strategy is U.S. Treasury Secretary Scott Bessent, who has been playing a leading role in trade talks since April 9, when Trump announced a 90-day suspension of "reciprocal" tariffs on most countries, excluding China.
Mr. Bessant floated the idea during a meeting with Mr. Trump at Mar-a-Lago on Tuesday, arguing that extracting concessions from American trading partners could prevent China and its companies from circumventing American tariffs, export controls and other economic measures.
While the debate over the scope and severity of tariffs continues, Bessant's plan for China includes using tariffs to isolate the country from the U.S. economy and possibly even remove Chinese stocks from U.S. exchanges. The Trump administration did not comment on the report.
In an interview with Yahoo Finance on Tuesday, Bessant said he was not ignoring the new round of bond market volatility triggered by the fast-moving tariffs, nor the risk that China could use its holdings of U.S. debt to inflict economic damage on the United States.
In an interview with Yahoo Finance on Tuesday, Bessant said he was not ignoring the new round of bond market volatility triggered by the fast-moving tariffs, nor the risk that China could use its holdings of U.S. debt to inflict economic damage on the United States.
Experts believe that the rise in the U.S. 10-year Treasury yield indicates a lack of confidence in a good resolution of Trump's trade war and a possible sell-off of U.S. Treasuries by China. China is the second largest holder of US debt.
Bessant, for his part, said selling Treasuries was not in China's best economic interest. The Treasury Secretary said, "If I have an argument with my spouse, I can burn down my house, but it doesn't do me any good." If they start selling Treasuries, that will have an impact on prices."
"But more importantly, they [the Chinese] have accumulated dollars, and what are they going to do with those dollars? So if they sell Treasuries, then they have to buy yuan, which will make their currency appreciate. They did the opposite. They have been pursuing a policy of weakening the yuan. So weaponizing U.S. debt makes no sense to them."
U.S. officials plan to negotiate with more than 70 countries to ask them not to allow China to ship goods through their countries, to prevent Chinese companies from setting up on their territory to avoid U.S. tariffs, and not to absorb cheap Chinese industrial goods into their economies.
One of the masterminds behind the strategy is U.S. Treasury Secretary Scott Bessent, who has been playing a leading role in trade talks since April 9, when Trump announced a 90-day suspension of "reciprocal" tariffs on most countries, excluding China.
Mr. Bessant floated the idea during a meeting with Mr. Trump at Mar-a-Lago on Tuesday, arguing that extracting concessions from American trading partners could prevent China and its companies from circumventing American tariffs, export controls and other economic measures.
While the debate over the scope and severity of tariffs continues, Bessant's plan for China includes using tariffs to isolate the country from the U.S. economy and possibly even remove Chinese stocks from U.S. exchanges. The Trump administration did not comment on the report.
In an interview with Yahoo Finance on Tuesday, Bessant said he was not ignoring the new round of bond market volatility triggered by the fast-moving tariffs, nor the risk that China could use its holdings of U.S. debt to inflict economic damage on the United States.
In an interview with Yahoo Finance on Tuesday, Bessant said he was not ignoring the new round of bond market volatility triggered by the fast-moving tariffs, nor the risk that China could use its holdings of U.S. debt to inflict economic damage on the United States.
Experts believe that the rise in the U.S. 10-year Treasury yield indicates a lack of confidence in a good resolution of Trump's trade war and a possible sell-off of U.S. Treasuries by China. China is the second largest holder of US debt.
Bessant, for his part, said selling Treasuries was not in China's best economic interest. The Treasury Secretary said, "If I have an argument with my spouse, I can burn down my house, but it doesn't do me any good." If they start selling Treasuries, that will have an impact on prices."
"But more importantly, they [the Chinese] have accumulated dollars, and what are they going to do with those dollars? So if they sell Treasuries, then they have to buy yuan, which will make their currency appreciate. They did the opposite. They have been pursuing a policy of weakening the yuan. So weaponizing U.S. debt makes no sense to them."
