US Treasuries as Negotiation Leverage in Tariff Talks, Central Bank Governor Suggests
14 April 2025 · Uncategorized ·
Source: · https://technews.tw/2025/04/10/u-s-treasury-bond-negotiation-chips/
On September 9th, U.S. President Trump announced a suspension of proposed tariff measures for ninety days. Taiwan is actively engaged in negotiations with the United States; legislators have suggested leveraging central bank-held US Treasuries as part of their negotiation strategy. Central Bank Governor Yang Jinlong supports this suggestion, stating that utilizing these long-term holdings could contribute to reducing financing costs for America due to its budget deficit.
President Trump initially implemented reciprocal tariffs on multiple countries beginning September 9th but subsequently announced a suspension after over seventy-five nations expressed interest in negotiations without retaliatory actions. This resulted in a ninety-day pause, with an immediate tariff of ten percent applied; however, China's tariff will increase to one hundred and twenty-five percent.
Taiwan has been granted three months for these ongoing negotiations despite this development. During today’s special report session at the Legislative Yuan Finance Committee—which included Central Bank officials among other relevant departments—several legislators from both the KMT (Nationalist Party) and DPP (Democratic Progressive Party), including Li Yanshao, Lai Shibaowei, Liu Xianxiang, Lai Huiyuan, Zhong JiaBin, voiced concerns regarding recent volatility in US Treasury markets and explored whether these assets could be strategically utilized during negotiations.
Yang Jinlong explained that Taiwan's foreign exchange reserves primarily consist of U.S. Treasuries (approximately eighty percent currently) and endorsed the legislators’ suggestions to use this asset for negotiation leverage, emphasizing its long-term nature rather than short-term trading activities—which would positively impact America’s financing costs.
Some lawmakers proposed negotiating increased purchases of US Treasuries alongside discussions on bond interest rates as a means to achieve mutual benefits. Yang Jinlong dismissed this approach, stating it is not aligned with market operations and is unrealistic; he emphasized that U.S. Treasury yields are critical for its financial markets, and such negotiations could undermine investor confidence potentially leading to global financial crises.
(Writer: Pan Ziyu)
President Trump initially implemented reciprocal tariffs on multiple countries beginning September 9th but subsequently announced a suspension after over seventy-five nations expressed interest in negotiations without retaliatory actions. This resulted in a ninety-day pause, with an immediate tariff of ten percent applied; however, China's tariff will increase to one hundred and twenty-five percent.
Taiwan has been granted three months for these ongoing negotiations despite this development. During today’s special report session at the Legislative Yuan Finance Committee—which included Central Bank officials among other relevant departments—several legislators from both the KMT (Nationalist Party) and DPP (Democratic Progressive Party), including Li Yanshao, Lai Shibaowei, Liu Xianxiang, Lai Huiyuan, Zhong JiaBin, voiced concerns regarding recent volatility in US Treasury markets and explored whether these assets could be strategically utilized during negotiations.
Yang Jinlong explained that Taiwan's foreign exchange reserves primarily consist of U.S. Treasuries (approximately eighty percent currently) and endorsed the legislators’ suggestions to use this asset for negotiation leverage, emphasizing its long-term nature rather than short-term trading activities—which would positively impact America’s financing costs.
Some lawmakers proposed negotiating increased purchases of US Treasuries alongside discussions on bond interest rates as a means to achieve mutual benefits. Yang Jinlong dismissed this approach, stating it is not aligned with market operations and is unrealistic; he emphasized that U.S. Treasury yields are critical for its financial markets, and such negotiations could undermine investor confidence potentially leading to global financial crises.
(Writer: Pan Ziyu)