From Yahoo Finance: 2025-05-09 19:38:00

As President Trump’s trade war with China escalates, concerns rise over China’s potential to devastate the U.S. housing market. China holds over $1.2 trillion in American mortgage-backed securities, making up 15% of outstanding mortgage balances. The threat of flooding the market with these securities could lead to higher interest rates and economic turmoil.

Financial experts warn that a move by China, Japan, or Canada to retaliate could widen mortgage spreads and create friction in the market. The Federal Reserve’s sale of mortgage-backed securities adds pressure. While China has slowly been selling off its MBS portfolio, there’s no indication of flooding the market.

A multi-decade housing correction caused by China could severely impact the U.S. economy. While China’s long history may cushion the blow, it could be disastrous for America. Cooler heads are hoped to prevail in this high-stakes economic standoff. The potential consequences highlight the importance of diplomatic solutions over economic warfare.



Read more at Yahoo Finance: China’s Nuclear Trade War Option–How Xi Could Destroy The US Housing Market In 1 Fell Swoop