Japan’s Finance Minister Katsunobu Kato has hinted that the country’s substantial holdings of US Treasury could serve as leverage in ongoing tariff negotiations with the Trump administration.

“It does exist as a card, but I think whether we choose to use it or not would be a separate decision,” Kato stated during a televised interview on national broadcaster TV Tokyo on Friday, AP reports.

While Kato refrained from providing further details or suggesting Japan intends to sell its holdings, the remark signals a potential shift in Japan’s strategy as tensions over tariffs grow.

Previously, Kato and other Japanese officials had dismissed the possibility of using Treasury holdings as a negotiation tool.

Japan is currently the largest foreign holder of US government debt, owning approximately $1.13 trillion as of late February. China, which is also engaged in a trade standoff with the United States, ranks second.

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Kato emphasised that various elements would be considered in negotiations with President Donald Trump, hinting that Japan’s continued investment in US bonds could be used to gain favourable terms.

The Trump administration has disrupted long-standing US trade policies, including with allies such as Japan, by imposing steep tariffs on a broad range of imported goods.

A new round of US tariffs — 25% on vehicles and auto parts, and a 10% baseline tariff — is expected to take effect soon, posing a threat to Japan’s slowing economy.

A delegation of Japanese officials visited Washington this week for discussions aimed at averting the new tariffs.