China’s ‘self-destructive nuclear option’ in trade war: Selling US Treasury bonds

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Included in China’s Twitter response to U.S. tariffs being increased on products originating in China, the threat of China selling U.S. Treasury bonds was explicitly called out a viable response option. Other responses included introducing tariffs on U.S. exports to China. Long considered a risk to the U.S. economy, this CNBC article takes a detailed look at what would happen in China engaged in this “nuclear” option.

“Consider it China’s nuclear option in the trade war with the U.S. — the ability to start dumping its massive pile of Treasury bonds that could trigger a surge in interest rates and substantially damage the American economy.”