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Japan replaced China as the largest foreign holder of US government debt

Japan surpassed China as the largest holder of US government debt in June amid an escalating  trade war.

China’s holding of US Treasury bonds rebounded by $2.3 billion to $1.11 trillion in June, up from a two-year low in May, while Japan’s holdings grew by $21.9 billion to $1.12 trillion, reaching their highest point since October 2016, according to data released Thursday by the U.S. Department of the Treasury.

The figures represent the first time since May 2017 that China is not the largest holder of Treasury bonds. Previous data from the US Census Bureau also showed that China is no longer the U.S.’s largest trade partner, falling to third place during the first six months of the year behind Mexico and Canada.

US President Donald Trump threatened Aug. 1 to impose additional tariffs of 10 per centon a further $300 billion of Chinese goods starting Sept. 1, further fanning the flames of an already-fierce trade war. However, the U.S. Trade Representative’s office announced Tuesday that new tariffs on certain goods will be delayed until mid-December.

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