TAIPEI (TVBS News) — Taiwan's financial authorities are exploring unprecedented economic leverage against Washington after President Donald Trump's announcement temporarily suspending reciprocal tariffs. During a heated session in the Legislative Yuan (Taiwan's parliament) on Thursday (April 10), legislators proposed wielding the island's massive U.S. Treasury bond portfolio as a negotiating tool in ongoing trade tensions. Central Bank Governor Yang Chin-long (楊金龍) signaled tentative support for this approach, marking a potential shift in Taiwan's typically cautious financial diplomacy.
Legislators expressed growing alarm about instability in U.S. government debt markets during the parliamentary session. Governor Yang provided context for these concerns, revealing that yields on 10-year Treasury bonds had approached 5 percent before Trump's tariff announcements but settled at 4.3 percent as of Wednesday. The central banker acknowledged the strategic potential of Taiwan's substantial Treasury holdings, noting that these investments have historically helped contain American borrowing costs — a point that could provide Taiwan meaningful leverage in bilateral negotiations.
In his testimony, Yang disclosed the strategic composition of Taiwan's massive foreign exchange reserves, revealing that more than 80 percent are invested in U.S. government securities — a figure he emphasized for its accuracy after Deputy Governor Chu Mei-lie (朱美麗) had previously overstated the allocation at 92 percent. Central Bank representatives explained fundamental bond market dynamics to legislators, noting that falling yields typically indicate rising prices, suggesting continued institutional buying rather than a selloff despite recent market turbulence.
Several parliamentarians floated aggressive proposals, suggesting Taiwan could offer to expand its Treasury holdings in exchange for favorable interest rate arrangements with Washington. Governor Yang firmly rejected these ideas as impractical and potentially destabilizing to global financial markets. The special hearing, convened by the Legislative Yuan's "Finance Committee" (立法院財委會), brought together top economic officials to address concerns about Taiwan's reserve management strategy during a period of heightened trade tensions and bond market volatility triggered by American tariff policies.