Taiwan warns debt and trade wars shake US bonds trust

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Taiwan’s central bank dropped a clear warning on Saturday: the US is racking up too much debt, and that’s shaking trust in its Treasury bonds. Central Bank Governor Yang Chin-long said the country’s ballooning budget, combined with Donald Trump’s economic policies, is creating doubt in the stability of US sovereign debt. Taiwan holds $593 billion in foreign reserves, and over 80% of that is sitting in US Treasuries. This is coming at a time when the US is leaning harder than ever on global investors to fund its spending. But Yang said loud and clear that Trump’s trade agenda and his habit of attacking the Federal Reserve are turning investors off. “Trump 2.0’s trade policy has made investors hesitant about holding US Treasury bonds,” Yang said, adding that the president’s massive budget bill, which he called the “One Big Beautiful Bill Act,” could make debt levels rise too fast and threaten future confidence in those bonds. Trump’s tax bill and tariffs cause deeper concern Yang didn’t mince his words about the impact of Trump’s economic decisions. He said Trump’s budget could trigger a $2.8 trillion increase in the federal deficit over the next decade. That projection came from the Congressional Budget Office, which evaluated the long-term costs despite some expected short-term economic gains. For a country like Taiwan, with most of its reserves locked into those US bonds, the risk is real. Trump’s trade moves are also getting attention. Just weeks into his second term, he slapped wide-reaching tariffs on multiple countries, including Taiwan. He paused the tariffs for 90 days in April to make room for negotiations, but Yang said this tactic does nothing to fix America’s real trade problems. “The tariff policy not only fails to solve the structural problems,” he said, “it will also impact the US…