Trump: If China plays THIS card, it will plunge the US into chaos

BERLIN LIVE Trump: If China plays THIS card, it will plunge the US into chaos Jonas Forster • 34 million • 2 minutes read Everyone is talking about Trump's tariffs and China's counter-tariffs, but China has a completely different weapon at its disposal. If China uses them, it will plunge the US into chaos. China has large holdings of US Treasury bonds. It holds approximately $760 billion in US bonds (as of 2025). If China were to sell them, it would plunge the US into chaos. Sales of US Treasury bonds by China would drive up interest rates The reasons: A massive sale of US Treasury bonds by China would increase the supply of bonds on the market, which would lower their prices and raise yields (interest rates). Higher interest rates increase financing costs for the US government, businesses, and consumers, as mortgages, auto loans, and corporate loans become more expensive. This could slow the US economy or, in the worst case, trigger a recession. For example, it is estimated that a significant sell-off could increase yields on ten-year bonds by 0.5 to 1 percent, which would have significant consequences. Pressure on the US dollar: A sell-off could weaken confidence in the dollar, as China could convert large amounts of dollar reserves into other currencies. A depreciation of the dollar would make imports to the US more expensive and fuel inflation, increasing the cost of living. However, the US Federal Reserve (Fed) could intervene by buying bonds to stabilize the market, as it has done in the past during other turmoils. This scenario is not so unlikely for one particular reason. Financial market turmoil: A sudden sell-off would trigger uncertainty in global markets. US stock markets could fall, as rising interest rates are often negative for stock prices. Investors could flee to "safe havens" like gold or the Swiss franc, increasing volatility. How likely is this scenario? While some consider this scenario unrealistic because it would also entail disadvantages for China, there are reasons why it is quite likely. The most important reason: China is likely to have noticed how easy it was, in the case of Russia, to confiscate government bonds held by another country. If the US were to do the same with Chinese-held government bonds, China would no longer be able to sell these bonds. It would therefore be logical for China to sell while it still can.