(Sarah McGregor – Bloomberg)
The possibility that China may taper its purchases of U.S. Treasuries sends a message that America could pay a price for imposing new trade barriers.
There’s been more tough talk than action from President Donald Trump’s year-old administration about cracking down on China’s unfair trading practices to reduce the deficit. But Trump is facing decision time as deadlines approach over whether to slap tariffs on imports from steel and aluminum to solar panels – which would be clearly aimed at China.
China added to jitters on Wednesday as Bloomberg News reported that government officials are discussing whether to slow or halt U.S. bond purchases as part of a review of its foreign-exchange holdings. While China has about a fifth of all foreign-held U.S. debt at $1.2 trillion, making it the largest single holder, it’s not clear how much of a sustained impact a Chinese retreat would have on U.S. borrowing costs. Click here to read more.