In 2014-16, China held $1.3 trillion in US debt. Now it owns less than half of that. Japan owns more American dept than the Chinese do currently. They have leveraged their debt in a controlled manner, to offset the effects of US tariffs. Now instead of getting American dollars for goods that China sells to the US, they just get the American dollars without having to sell anything. Just collect on the bonds as they come due. It is a trick I am sure the other countries, including Canada, have up their sleeves.
Whatever the American population pays in the tariffs (sales tax) on imported goods, the more they have to borrow from the rest of the world. It might LOOK like a windfall for the American treasury, but in the end the American economy just isn’t generating the manufacturing wealth to pay the tax. Eventually, the American companies will revolt against this tax, and demand compensation. That will be even more money the US treasury will have to borrow.
In 2014-16, China held $1.3 trillion in US debt. Now it owns less than half of that. Japan owns more American dept than the Chinese do currently. They have leveraged their debt in a controlled manner, to offset the effects of US tariffs. Now instead of getting American dollars for goods that China sells to the US, they just get the American dollars without having to sell anything. Just collect on the bonds as they come due. It is a trick I am sure the other countries, including Canada, have up their sleeves.
Whatever the American population pays in the tariffs (sales tax) on imported goods, the more they have to borrow from the rest of the world. It might LOOK like a windfall for the American treasury, but in the end the American economy just isn’t generating the manufacturing wealth to pay the tax. Eventually, the American companies will revolt against this tax, and demand compensation. That will be even more money the US treasury will have to borrow.