---
title: Trump Wants Canada as the 51st State. Instead, Canada Is Closing In on China as a US Creditor
description: US Treasury data put $464.6 billion of Treasuries in Canada in August, closing on China's $590.7 billion as Trump keeps calling for a 51st state.
author: Darie Nani (Editor-in-Chief)
date: 2026-10-23T12:37:50.753Z
updated: 2026-10-23T12:37:50.769Z
canonical: https://www.sovereignmagazine.com/article/canada-us-treasury-holdings-china-51st-state
image: https://cdn.nanimediahouse.com/us-treasury-building-washington-461706.webp
categories: Markets
content_type: Analysis
region: Canada, United States
publication: Sovereign Magazine
schema_type: Article
---

Donald Trump has pressed since at least February 2025 for Canada to become the 51st state, and over the same stretch Canada has climbed to fifth place among the largest foreign holders of US government debt. [Figures the US Treasury released on October 16](https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/slt_table5.txt) put $464.6 billion of Treasuries in Canada at the end of August, behind only Japan, the UK, China and Belgium. China's holdings, which topped $1 trillion through 2021, have fallen to $590.7 billion, leaving Canada about $126 billion short of passing it. All figures are in US dollars.

Trump's case, made in February 2025, was that Canadians would pay lower taxes and get US military protection. Asked whether he was joking, he said, "I still believe that," and added that "it takes two to tango." In January 2026 he again called Prime Minister Mark Carney "Governor" while threatening 100 percent tariffs over Canada's economic ties with China, Newsweek reported. After trade talks between the two countries collapsed in late August, Treasury Secretary Scott Bessent was asked whether Trump still wants Canada as a state. He declined to answer directly, telling Newsweek the president "would like Canada to come to the table and negotiate in good faith." The US has charged [a 50% tariff on a range of Canadian goods since August 22](https://www.sovereignmagazine.com/article/canada-eu-associate-membership), and Canada answered with its own counter-tariffs from September 8.

## Treasuries Held Through Canada Have Risen by a Third Since January 2025

The Treasury put Canada's holdings at $380.3 billion in December 2024 and at $350.8 billion in January 2025, [according to its historical series](https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/mfhhis01.txt). August's $464.6 billion is $113.8 billion, or 32%, above that January figure. Canada held about $106 billion in March 2021, so the total has more than quadrupled in five years.

Canada's holdings peaked at $476.1 billion in September 2025, when it briefly ranked fourth, ahead of Belgium, and stood at $468.3 billion in December 2025, so August's $464.6 billion is slightly below both. Against August 2025, when it held $444.0 billion, the gain is $20.6 billion. Most of the narrowing gap with China this year comes from China's fall.

## China's US Treasury Holdings Have Dropped From Over $1 Trillion to $590.7 Billion

China held $1,040.3 billion of Treasuries at the end of 2021, $759.0 billion at the end of 2024 and $590.7 billion in August 2026, down from $618.0 billion in July. Since December 2024 its holdings have shrunk by $168.3 billion while Canada's have grown by $84.3 billion. Japan, with $1,068.3 billion, and the UK, with $1,009.5 billion, remain the two largest foreign holders of US Treasuries, with Belgium fourth at $490.5 billion.

A report published on October 17 and cited by the Philippine Canadian Inquirer suggests Canada could become one of the three largest foreign holders before 2028. To get there, the holdings attributed to Canada would have to pass both Belgium's and China's. The Inquirer said higher Treasury yields have made the securities more attractive to some investors.

Some observers have raised the possibility that Chinese investors buy through Canadian intermediaries, but the Inquirer wrote that "there is no conclusive public evidence establishing how much, if any, of Canada's reported holdings is beneficially owned by Chinese entities."

## The Canadian Government's Own US-Dollar Reserves Are About $63 Billion

The Treasury compiles its country table mainly from US-based custodians and broker-dealers, so it records where Treasuries are held rather than who ultimately owns them. In a note to the table, the Treasury says that because securities in overseas custody accounts "may not be attributed to the actual owners, the data may not provide a precise accounting of individual country ownership of Treasury securities."

Canada's Department of Finance put the government's official international reserves at $125.3 billion on September 29, of which US-dollar deposits and securities made up $63.4 billion. That is about one-seventh of the $464.6 billion the Treasury attributes to Canada. The rest is held through Canadian accounts by a range of public and private investors, some of whom may not be Canadian. The Inquirer wrote that the rise "should not be interpreted as the Canadian government directly lending hundreds of billions of dollars to Washington." Across all foreign holders, private investors [overtook foreign governments as owners of US Treasuries in 2024](https://www.sovereignmagazine.com/article/ai-driven-corporate-bonds-intensify-competition-for-u-s-treasury-investors).

The Treasury publishes holdings for September on November 18.

## FAQ

**Q: Is Japan, the largest holder, also cutting its US Treasuries?**
Yes. The Treasury put Japan's holdings at $1,068.3 billion in August 2026, down from $1,185.5 billion at the end of 2025, a fall of $117.2 billion this year.

**Q: Are any of the largest holders adding US Treasuries?**
The UK is. Holdings attributed to the UK rose from $863.2 billion at the end of 2025 to $1,009.5 billion in August 2026, passing $1 trillion, according to the Treasury.