The US recently imposed tariffs on $200 billion worth of Chinese exports, prompting Beijing to counter with its own tariffs on $60 billion worth of US products. However, some speculate that China, instead of continuing to match tariffs (in which case it will run out of options first), might hit the US in a more significant way: by selling its hoard of US securities, worth $1.17 trillion.
But US Treasury Secretary Steve Mnuchin said Friday he is not "losing any sleep" over the prospect of China selling its stockpile of US government bonds, CNBC reported.
"If they decide they don't want to hold them, there are other buyers," Mnuchin said in an interview with the outlet. "And, obviously, that would be very costly for them to do."
"They're looking at economics the way we're looking at economics, so it is not something I'm losing any sleep about," he added.
Mnuchin also defended Trump's tariffs on Chinese goods and called them a very important negotiation tool.
As the trade war rages on, White House economic advisor Larry Kudlow said Thursday that the US administration is working on a meeting between US President Donald Trump and Chinese President Xi Jinping at the G-20 summit in Argentina next month.
According to Mnuchin, the meeting could happen if the administration believes it will be positive.
"If it looks like we can make positive direction, then I'm sure the president will have the meeting," the treasury secretary said in his interview. "But we need to do work in advance to make sure that there will be changes and that we can have a more balanced trading relationship."
Speaking about trade with China, Mnuchin also pointed out that currency controls would be a very important part of trade negotiations with China. Washington accuses Beijing of manipulating its currency in order to gain trade advantages.
"We are going to make sure that currency is definitely part of these discussions. We are going to make sure that whatever we make up on trade we don't lose on currencies," he said.