When a Danish pension fund recently announced it would sell its US$100 million (£74 million) holding of US government bonds, the move was tiny in financial terms – just a drop in a US$30 trillion ocean. But it touched on a much bigger issue. Foreign investors now hold around one-third of all US government debt, amounting to roughly US$9.5 trillion.

Of these foreign holdings, Europe has US$3.6 trillion, making it collectively the largest holder of US debt, larger than Japan (which holds US$1.2 trillion) or China (which owns around US$700 billion).

Could this financial exposure be turned into political leverage – a way for Europe to push back against Donald Trump’s recent threats over Greenland and European sovereignty? Or, as the US president has claimed, does the US still “hold all the cards” in debt markets?

At the World Economic Forum in Davos recently, Trump threatened a “big retaliation” if European countries sold US assets as a response to tariff threats. When politicians talk about Europe “dumping” US government debt, it sounds like a simple, almost mechanical, act whereby political leaders make a decision and trillions of dollars’........

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