Trump FREAKS OUT as Japan Sells Treasury Holdings Against U.S. Tariffs – Japan Ditches $1.1 Trillion

Trump FREAKS OUT as Japan Sells Treasury Holdings Against U.S. Tariffs – Japan Ditches $1.1 Trillion

For decades, US Treasury bonds were considered the gold standard of financial safety. Backed by the US government with its history of full and timely debt payments, the world’s largest economy, and deep financial markets with high liquidity, investors worldwide trusted that no matter what crises or fluctuations arose, the US would always pay its debts. This made Treasury bonds a safe haven during periods of market turmoil. Countries like Japan, Saudi Arabia, and the UK once held massive amounts of US bonds as a way to safeguard their national reserves and strengthen strategic alliances. But lately, that picture has quickly shifted. Japan has sharply reduced its holdings to around $1.1 trillion, down from more than $1.3 trillion in early 2022. Saudi Arabia has also reduced its US bond reserves from around $180 billion to $135 billion as of early 2024. These countries are now exploring alternative investment channels such as gold, the Chinese UN, or even digital assets. A major factor behind this shift is the growing US national debt, which surpassed $34 trillion in early 2024, along with the continuous rate hikes by the Federal Reserve to curb inflation. Japan was once the largest foreign investor in US Treasury bonds. For many years, even during global financial crisis, the Eurozone debt crisis or the US China trade tensions, Japan continued to buy large amounts of US bonds as a measure of financial safety. But times have changed. Japan’s defense spending is expected to surpass 2% of GDP, its highest level since World War II to meet its new security strategy. Historically, Japan’s defense budget had been capped at around 1% of GDP for many decades. Now, targeting over 2% means nearly doubling the previous defense spending, which requires more domestic funding. For Japan, cutting back on US bond purchases means keeping more capital for domestic projects from infrastructure to defense. In late 2023, Japan announced plans to spend about $320 billion over 5 years to modernize its military. This enhances Japan’s economic self-sufficiency, but also diminishes the financial ties it shares with the US. This decision isn’t just a number on a balance sheet. It sends a crucial message. If the trend of selling US bonds continues, the US will have to offer higher interest rates to retain buyers. Borrowing costs will increase and pressure to pay interest will rise. The risk of a budget crisis becomes ever more real. The US Treasury Department continues to argue that US Treasury bonds remain the largest and most liquid market in the world. But the pullback from close allies like Japan is a signal that can’t be ignored. Japan’s devestment is not just a standalone investment decision, it reflects broader concerns about the US’s ability to manage its national debt and fiscal stability. For the US, losing a stable buyer like Japan will make bond issuance more expensive. With national debt already exceeding $34 trillion, this is a complex challenge. The ongoing debates over the debt ceiling in the US have repeatedly threatened to shut down the government, eroding global investor confidence. It’s not just the US that’s affected. As 16 allied nations reduce their holdings of US Treasury bonds, the market worries about a snowball effect. One country selling off will prompt others to consider doing the same. To retain buyers, the US will need to raise the interest rates on its bond issuances. But this will not only drive up borrowing costs within the US, it will also shift global capital flows, pushing borrowing costs higher in developing countries. When the US raises interest rates, global investment will flow toward the US to take advantage of higher yields, pulling capital away from developing nations. These countries will have to raise their interest rates to retain capital, increasing borrowing costs for infrastructure and public services. Nations like Brazil, India, Indonesia, and South Africa will feel this pressure. The $119 billion in bonds launched, but the market coldly rejected them. Huh? Who would still lend money to the US? On June 13th, 2025, the US Treasury auctioned $119 billion in short and medium-term bonds. But the outcome shocked the market. The bid to cover ratio was just 2.1, the lowest in over a decade. This clearly signals that confidence in the US government’s ability to pay its debts is slipping fast. Even more alarming, the 10-year bond yield surged to 4.25. 258% comma the highest it’s been since the 2008 financial crisis. The market is demanding higher returns to take on the risk. And that risk comes from none other than the world’s largest borrower, the US government. This failed auction sets off a chain of effects. For the public, mortgage rates and consumer loan rates are rising. Mortgage rates have climbed above 7.8%, 8% comma making home ownership unaffordable for millions of Americans. Car loans and credit card rates are also going up while the cost of everyday goods remains high. For the economy, the government now has to pay more interest, which means bigger budget deficits and cuts in public investments. Essential areas like infrastructure, health care, and education are facing growing financial strain for politics. Disagreements over the debt ceiling, budget, and taxes are getting worse. The possibility of a debt default is no longer a distant concern, and faith in Washington’s financial management is fading fast. The main reason, countries that used to be reliable buyers of US bonds like China, Japan, and Saudi Arabia are reducing their holdings. Part of this is due to geopolitical tensions and part is because they’re diversifying their reserves into assets like gold and euros. But there’s a silver lining for long-term investors. The current high yields present a chance to make a solid return. The rise in yields is also forcing the government to rethink its financial strategy, boost transparency, and tighten fiscal discipline. As of mid 2025, US national debt has surpassed $36 trillion, nearly 100% of GDP. Oh, in just 2024 alone, more than $2 trillion in new debt was added. According to the Congressional Budget Office, interest payments on this debt could exceed the defense budget in the coming years, reaching $1.5 trillion annually. This money doesn’t build roads, educate children, or provide emergency relief. It’s just interest payments. Americans are paying the price twice. Once through taxes and the growing public spending deficit and again through higher interest rates that weigh heavily on personal finances. US Treasury bonds are more than just financial assets. They’re the backbone of the global financial system. Central banks, investment funds, and insurance companies across the globe use them as reserves and collateral. When demand for these bonds drops, yields rise, and prices fall, the consequences are felt worldwide, a stronger dollar. This might sound great for American tourists, but it’s a nightmare for developing countries borrowing in dollars. They end up paying more on their debt. Their local currencies weaken, inflation climbs, and central banks are forced to raise interest rates, all of which can push them toward a crisis. Europe under pressure as US bonds become more attractive. Investors are pulling money out of the EU market. The European Central Bank faces a tough dilemma. If it doesn’t raise interest rates, capital will flee. But if it does raise rates, it risks stifling already weak growth. a smoldering banking crisis. Big banks hold significant amounts of US bonds. When bond prices drop, they face hidden losses affecting their ability to lend. $42 billion pulled out of the US market in just 30 days. With Treasury yields soaring above 5%. Is this a sign that Wall Street is falling apart? The US financial market is witnessing a historic capital outflow of 42 billion of foreign investment has evaporated from fixed assets like treasury bonds and stocks. The 10-year US Treasury yield has surged past 5%. A multi-deade high signaling potential panic. Why are major foreign investors fleeing? Because while yields rise, the dollar weakens, eroding real returns like holding a tattered bill but still paying a high price. According to UBS, wealthy Asian clients reduced their US bond holdings by 14%. Shifting funds into gold, the Chinese yuan, and digital assets. This shift in capital strikes a blow to America’s decades old financial empire. Meanwhile, China launches the largest IPO of 2025, 5.3 billion, with zero US capital involvement due to sanctions and tightened regulations. KTL, an electric vehicle battery maker holding 38% global market share, shows China is building its own financial tower independent of Wall Street. This is a classic hoist by their own petard moment for the US. As trade wars and tariffs isolate it from international capital flows, the US government is quietly playing the game by devaluing the dollar to boost domestic manufacturing, forcing allied Asian currencies, especially Japan and South Korea, to appreciate. The goal is to create an artificial price advantage for US goods, effectively freezing Asian exports by making their products more expensive globally. However, the IMF forecasts a 0.9% GDP loss for the US de worse than China’s 0.6% decline. Inhask proof of the self-inflicted wound from this policy. US labor costs remain two to three times higher than Asia’s. So true competitiveness relies not on currency tricks but fundamentals. The 1985 Plaza accord caused the yen to surge over 50%. triggering a decadelong financial crisis from Japan’s export collapse. Now Japan and South Korea strongly resist US pressure to appreciate their currencies be even demanding tariff cuts if forced to take this hit. Toyota, despite investing $14 billion in a battery plant in North Carolina, still produces 3 million cars in Japan. As the US market is only 25% of sales, gas, meaning American hunters might miss their biggest prey if the yen spikes too much, demand for US Treasury bonds is plummeting while issuance rises 17%, pushing yields up but leaving buyers scarce. US public debt is expected to exceed 100% of GDP within a few years. With inflation stuck above 3.6%, trapping the government between a rock and a hard place, the Fed may be forced back into quantitative easing, QE, to rescue the bond market, which would weaken the dollar further, adding fuel to the fire of capital flight. The risk of default through dollar depreciation and real inflation is looming, directly impacting mortgage rates, savings, and living costs. Asian financial hubs like Hong Kong and Singapore are rising powerfully, attracting most of the global IPO capital flow. China’s economy grew 6.9% in Q1 2025, nearly five times that of the US foreign investors have cut US asset holdings by 327 billion year to date, shifting to yuan, gold, and digital assets. This shift signals a new era of financial systems independent of the US dollar, raising a big question. Can America maintain its status as the global financial king while its empire trembles dayby day? US bond rates hit 5%. Wall Street is trembling. Trump is kneeling before China. Is the financial crisis already here? You’ve probably heard of US Treasury bonds, once hailed as the guardian of the global economy. But right now, they’re crashing down like a building under attack. Just recently, the 10-year US Treasury bond rate shot up to nearly 5%. That’s the highest it’s been in years, and it could keep rising if the US doesn’t find a way to stabilize. This spike in bond rates forced Wall Street into emergency mode. Investors aren’t just pulling their money out, they’re fleeing from US bonds. The global financial market is in crisis as the US struggles to secure new debt which only escalates the situation. The Treasury Department and the White House have issued red alerts. The global financial markets are in turmoil and the core problem is the lack of confidence in US Treasury bonds. As the financial storm rises, China and Japan decided to team up to create a covert financial crisis. Both nations started dumping US Treasury bonds at the beginning of 2025, sending shock waves through the world’s largest economy. But surprisingly, shortly after they began buying US bonds again dot why would they do this? This is a highly sophisticated strategy. China and Japan know that if they push bond prices up, they can sell them at a higher price and control the global financial market. After doing so, they continued dumping US Treasury bonds, pushing prices back down and making it harder for the US to borrow money. This financial strategy could bring the entire US economy to its knees. China and Japan hold the key to the US economy, and Trump cannot ignore it. In stark contrast to his bold claims in the past, Trump is now quietly begging China for help. The Chinese Ministry of Commerce recently confirmed that the US has sent multiple trade negotiation proposals. It’s not China reaching out. Trump had previously removed tariffs on key Chinese products like laptops, components, and machinery. However, what’s shocking is that he hasn’t received any concessions from Beijing. Trump has no choice but to chase China’s demands. As his tax cuts on Chinese goods stir strong negative reactions from domestic businesses, Trump is left increasingly cornered while China continues to hold firm on its negotiating position. As the US economy faces a crisis, major corporations like Apple and Walmart are scrambling back to China for salvation. Apple, if it halts its collaboration with China, could lose up to $21 billion in revenue. Walmart and many other companies are worried about supply chain disruptions due to unstable trade relations with China. Meanwhile, investors are fleeing the US dollar. Over 76 billion euros have been pulled out of the US and shifted to other economies, a clear sign of the weakening of the USD. According to the IMF, the global reserve share of the US dollar has dropped to its lowest point in 30 years, now standing at just 57.1%. This isn’t only affecting corporations. It’s directly impacting everyday Americans. As the USD loses value, living costs rise, commodity prices sore, and purchasing power drops dramatically. Investors are slowly losing confidence in the US dollar. pushing the US economy toward an unprecedented financial crisis. Ontario just issued $2 billion in bonds in US dollars, but there’s not a single trace of Wall Street in Canada’s biggest financial deal of the year. If the US is no longer invited to the game with its own currency, what’s really slipping through our fingers? In June 2025, Ontario, the largest residential, industrial, and financial hub in Canada, issued $2 billion in government bonds with a 10-year maturity. This is usually an annual move to fund infrastructure, healthcare, and education. But this time, something unprecedented happened. No American bank was appointed as the underwriter. Instead, Barclays from the UK along with three major Canadian financial players, Capital Markets, CIBC, and Scodia Bank took the lead in attracting global investors. In the financial world, this shift in underwriters speaks volumes. It’s not just a technical decision. It reflects political trust, confidence in risk management, and above all, a subtle policy message. When a province like Ontario, traditionally close to US investors, actively excludes them, it shows that trust is starting to erode. Many financial publications are calling this a strategic adjustment. Some experts describe it as a symbolic response to Washington’s tariff policies. But in my view, this isn’t just a one-off event. It’s the first sign of a strategic retreat from US dominance in North American financial systems. With increasingly unpredictable US policies, from tariffs on allies to weaponizing the dollar, Canada is quietly recalibrating its financial footing. Capital markets are about more than just money. They’re built on trust. And when trust in traditional financial partners starts to fade, capital flows will adjust quietly but irreversibly. We’re witnessing a form of soft sovereignty here where countries don’t necessarily sever ties with the US dollar, but actively seek to reduce dependence on the US banking system. When Ontario makes this move, it’s not just a provincial decision. It’s a signal to the global market that a new era is starting. One where longtime partners must prove their value, not just rely on their historical role. Back in the 1980s, when Canada started integrating deeply into the global financial value chain, provinces from Ontario to Alberta issued bonds in USD, not just for liquidity, but because the US banking system was the safest channel for connecting global investors. Wall Street wasn’t just a partner. It was the backbone of Canada’s capital markets. After the NAFTA agreement in 1994, crossber credit between the two countries skyrocketed, fueling exports of cars, minerals, and North American infrastructure projects. Back then, not having US banks involved in a Canadian bond deal would be like the Yankees missing from a major league baseball game almost unthinkable. Even during the 2008 financial crisis when the US banking system was rattled, Canada maintained partnerships with US institutions to ensure stability in USD denominated bonds. But today, after four decades of cooperation, Ontario has chosen a different path. This shows that even longstanding trust built over decades can be broken by just a few shifts in policy. The clearest motivation behind this shift is US tariffs and protectionism. When the Trump administration reinstated a 50% tariff on Canadian steel and aluminum, it didn’t just hit businesses. It struck at the very foundation of financial relationships. The US banking system had served as the intermediary for Canada to raise capital for infrastructure development, some of which involved industries being tariffed. This created a paradox. Canada borrowed money from US banks, issued USD denominated bonds to build aluminum plants only for the products from those plants to be heavily taxed by the US. According to statistics, Canada direct investment from the US fell by 177.8 billion in Q12025, an unprecedented drop since 2009. Meanwhile, investment from the rest of the world grew by nearly $75 billion. The capital didn’t disappear, it just moved elsewhere. The divergence in interest rate policies between the Fed and the Bank of Canada also made currency risk insurance costs rise, making US banks less appealing to the provinces. And finally, a political factor can’t be overlooked. Dependence on banks that may be influenced by US policy makes Canadian policymakers feel they need to pull out early before being tied down. The divergence in interest rate policies between the Fed and the Bank of Canada also made currency risk insurance costs rise, making US banks less appealing to the provinces. And finally, a political factor can’t be overlooked. Dependence on banks that may be influenced by US policy makes Canadian policymakers feel they need to pull out early before being tied down. This seemingly technical shift is starting to create real ripple effects across Canada’s and the US’s economy. By excluding US banks from Canadian government bonds, they lose access to one of the world’s most stable debt markets. Those commission fees are no longer appearing on their quarterly balance sheets. But the impact goes further. Canadian insurance companies, pension funds, and manufacturers now need to rewrite their entire capital access mechanisms. A midsize solar energy company in Thunder Bay reported that project financing costs increased by more than 2% because they had to use a Luxembourg bank as an intermediary instead of City Bank as before. A manufacturing business in Calgary now faces an additional 17-day delay in processing credit contracts after switching from the US-based Swift system to Europe’s payment systems. Meanwhile, small businesses without legal teams or international consultants are struggling to understand and adapt to the new rules. A transport company in Saskatchewan said, “We’re not anti-American, but we can’t wait for Washington to stop politicizing everything just to secure funding.” Even for consumers, the effects are beginning to show. The fluctuations in the CAD USD exchange rate after bond issuances are causing import prices to rise, particularly for technology, electronics components, and consumer goods. Based on my analysis, if this trend continues, Canada will not just diversify its financial portfolio. It will create a parallel financial system separate from the US one. This could fragment North America, which once was a unified financial block. When provinces like Alberta and Ontario take the lead in excluding US banks, other provinces like British Columbia or Quebec may follow suit. And if they choose to issue bonds in euros, pounds, or even yan in the future, the US dollar will gradually lose its natural position in the international debt market. Additionally, Vietnam, a rapidly developing economy in Southeast Asia, sending representatives to the MYB expo in Montreal in late 2024, is no coincidence. Canada is using trade to open up its financial sector. Establishing ties with CPTP countries like Vietnam, Singapore, and Japan could open up markets for Canadian agricultural energy and technology products. But it also distances Canada from the financial center of New York. Historically, there was a time when the UK and France were financially divided in the 19th century, and that split lasted nearly a century. If Washington doesn’t recognize this, the risk is not just losing markets, but losing strategic influence in its own backyard. Is it possible to have a world where the US dollar is still used for contract valuations, bond issuances, but Americans, banks, financial institutions, even investors are no longer sitting at the negotiating table? If a province like Ontario can actively exclude the entire US banking system from debt issuance, what happens if Brazil, Saudi Arabia, or even Mexico follows suit? The issue here isn’t just about bonds or a few percentage points of underwriting fees. It’s about trust. Once longtime allies like Canada stop automatically choosing the US as a financial partner, it’s no longer a tactical shift. It’s a complete strategic overhaul. And in a world where political risks increasingly shape economies, the real question isn’t who’s right, who’s wrong. It’s is America pushing its allies away while still holding on to the currency the entire world uses?

Trump FREAKS OUT as Japan Sells Treasury Holdings Against U.S. Tariffs – Japan Ditches $1.1 Trillion

In this video, we explore the recent shift in global finance as Japan and other U.S. allies reduce their holdings of U.S. Treasury bonds, a move that has significant implications for the U.S. economy and global markets. Once considered the safest investment in the world, U.S. Treasury bonds are seeing decreasing demand from traditional buyers like Japan, Saudi Arabia, and the UK.

Japan, a long-time buyer of U.S. debt, has significantly reduced its holdings, signaling a shift in its investment strategy. This is partly due to increased domestic defense spending and a growing need for funding internal projects. With Japan holding over $1 trillion in U.S. debt, this change raises concerns about the stability of the U.S. financial system and the cost of borrowing.

As more countries follow Japan’s lead, the U.S. may face higher interest rates and increased borrowing costs, which could affect everything from government spending to consumer loans. The video also examines the broader impact on global markets, including the risk of a debt crisis in developing countries that rely on U.S. dollars for their debt.

We discuss how this shift could spark a domino effect, with other nations diversifying their investments and looking for alternatives to U.S. debt. Could this be the beginning of the end for the dollar’s dominance in global finance? Tune in to find out how these developments are reshaping the world economy and what it means for the future of U.S. economic policy.

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