Will the $20+ trillion national debt come to be used as a weapon against the U.S. in President Trump’s recently announced new trade war?

It’s a situation that has been threatened before, as we saw with Saudi Arabia during President Obama’s tenure in office, and it is something that we have seen other nations do before, where Russia worked over Ukraine as part of a wider saber-rattling exercise in recent years.

But this time, the U.S. is particularly vulnerable, because President Trump’s really ugly higher spending plans are coming at a time when the U.S. Federal Reserve is looking to stop being such an enabler of U.S. government borrowing, where the combination means that the U.S. government will have to look abroad to borrow the money to support President Trump’s deficit boosting fiscal plans. Richard Leong of Reuters reports:

U.S. President Donald Trump’s plan to slap stiff tariffs on imported steel and aluminum has rattled financial markets and stirred fears that some trading partners might retaliate by dumping U.S. Treasuries.

Should China, Japan and other nations, which have recycled their trade dollars through their Treasuries holdings, suddenly decide to whittle them down, markets could be in for a rough ride.

Such a retaliatory move, in the wake of Trump’s first big protectionist action, comes at a time when foreign demand for U.S. debt is seen critical to offset an expected surge in federal borrowing needs, analysts and investors said on Friday.

In the case of China and Japan, the two nations together hold about 12.2% of the $20.2 trillion total public debt outstanding, which is nearly $1 out of every $8 that the U.S. government has borrowed in its history, which may give them some pretty strong leverage should they choose to use it. In terms of the $14.7 trillion publicly-held portion of the national debt, Japan and China hold nearly $1 out of every $6 that the U.S. government has borrowed, which is relevant because this is the portion of the national debt that will need to increase to support the U.S. government’s spending plans set by the Bipartisan Budget Act.

If that kind of retaliation happens, the likely effect will be to spike up the yields on U.S. Treasuries, which are the interest rates that the federal government pays to its creditors. And in fact, that is exactly what happened on March 2 as the markets responded to President Trump’s announcement of new tariffs on foreign-produced steel and aluminum imported into the U.S. CNBC reports:

U.S. government debt yields rose Friday after President Donald Trump’s tariff announcement sparked fear of a trade war and more robust inflation….

Fears of stronger inflation as a result of higher materials prices and foreign retaliation sent yields up across the board Friday. The United States is expected to set tariffs of 25 percent when it comes to steel and 10 percent for aluminum, which could emerge as soon as next week and put pressure on companies both domestically and internationally.

“Trade wars and tariffs are bearish for bonds because they raise inflation,” said Kathy Jones, chief fixed income strategist for the Schwab Center for Financial Research. “Particularly when we look at steel and aluminum, they’re a part of a lot of things we use: autos, beer cans — you name it.”

“If [the tariffs] go through — and they’re substantial — it’ll be passed along to the consumer,” she added. “Ultimately, tariffs tend to slow economic growth … People are looking at it and saying if we get some versions of this and retaliation, it’s just a lose-lose situation.”

Where the national debt is concerned, higher yields on U.S. Treasuries mean that an even larger portion of what the U.S. government spends each year will have to go to pay higher amounts of interest to the nation’s creditors, which means less money will be available to go to the things that Americans, including President Trump, would rather have the government doing.

When we consider the costs, President Trump’s idea of a “easy win” trade war doesn’t look much like a win for Americans – particularly where the ticking time bomb of the national debt is concerned.