U.S. allied nations purchased the largest amount of Treasury securities in approximately nine years last year, even as total national debt surpassed $38 trillion to reach record levels. Meanwhile, non-allied countries including China continued to sell off their holdings, raising concerns about the vulnerability of U.S. finances to allied capital.
According to Bloomberg's analysis of U.S. Treasury Department data released on the 26th (local time), U.S. allies made net purchases totaling $463.9 billion in Treasury securities during 2025. This marks the largest annual figure since 2016.
In contrast, countries with tense relations with the United States made net sales of $125.24 billion in Treasury securities last year—the largest sell-off in six years. Neutral-leaning countries also reduced holdings by approximately $3.15 billion. Combined, non-allied and neutral nations have reduced their U.S. Treasury holdings by a total of $673 billion between 2016 and 2025.
Bloomberg explained that country classifications were based on United Nations resolution voting patterns, a widely used academic methodology. Australia and other long-standing military allies were classified as allies, China as non-allied, and Mexico as neutral.
By country, the United Kingdom ($189.6 billion), Canada ($71.2 billion), and Japan ($51.4 billion) were the largest purchasers of U.S. Treasuries last year. However, analysts note that UK figures may not reflect actual investors due to its status as a global financial hub.
Conversely, China (-$110.2 billion), India (-$51.8 billion), and Brazil (-$39.6 billion) made the largest reductions, followed by Belgium (-$16.6 billion). Belgian holdings are estimated to include Chinese funds. Bloomberg noted that "while U.S. Treasuries remain the world's premier safe-haven asset, President Donald Trump's unpredictable policy decisions are fueling investor anxiety and accelerating the outflow from Treasuries."
This trend demonstrates the structural dependence of the U.S. Treasury market on allied nations. As America's fiscal deficit expands, allied countries are bearing a significant portion of overseas funding needs. Maxence Biso, head of Arkevium Research, analyzed: "The risk of Chinese selling is already priced into the market. The real risk is if allies stop buying or collectively move to risk-off positions." Should capital from even some allied nations exit, Washington's fiscal operations could face severe pressure.
However, many view such concerns as excessive. Excluding short-term instruments, foreign holdings of U.S. Treasuries account for approximately one-third of total outstanding debt—below the 2012 peak of 52%. Both allies and rivals now have less market influence than before. Kiyoshi Ishigane, fund manager at Mitsubishi UFJ Asset Management, stated: "There is virtually no large bond market that can substitute for the U.S. market. Even if investors are dissatisfied with America, relocating capital elsewhere is realistically difficult."
Some suggest that despite reports of China sharply reducing Treasury holdings, its actual dollar asset exposure may have been maintained or even expanded. Brad Setser, researcher at the Council on Foreign Relations (CFR), wrote in a recent Financial Times op-ed that "the entity accumulating dollar assets in China has shifted from the State Administration of Foreign Exchange (SAFE) to state-owned banks," arguing that judging China's dollar reduction based on recent indicators alone may be an illusion.
U.S. Treasuries remain attractive, according to analysts. Skylar Montgomery, strategist at Conning, projected: "As productivity improvements push up the neutral rate and keep U.S. Treasury yields at relatively high levels, global capital will likely continue flowing into the Treasury market."