What would happen if China called in its debt? I was talking with a friend of mine the other day about Trump putting the 35% tax on all overseas manufacturing. Couldn't this hurt those countries that have plants where US manufacturing comes from? I think, and correct me if I'm wrong, the tax is to encourage businesses to bring their manufacturing back to the US?

I'm not sure how accurate this site is but here is the Top 10 of countries the USA owes money to:


China, Mainland, $1244.0 billion dollars
Japan, $1133.2 billion dollars
All Other, $416.0 billion dollars
Cayman Islands, $260.2 billion dollars
Ireland, $259.8 billion dollars
Brazil, $249.5 billion dollars
Switzerland, $228.7 billion dollars
Luxembourg, $221.8 billion dollars
United Kingdom, $216.5 billion dollars
Hong Kong, $192.7 billion dollars


Looking over this link (which is a little old but I couldn't find anything newer), looks like most of oversea manufacturing by US companies is done in China.

What if China said it wants its money back? Is that possible?
You have to understand how international debt works. These are not loans, but bonds. China buys a US bond for, e.g., 98 USD. This bond is a promise by the US Treasury to pay 100 USD one year from now. China owns a lot of this type of bonds. Once the bond hits maturity, China is paid 100 USD and the thing it typically does with these 100 USD is it buys the same type of bond again. If it decides it no longer wants to hold US debt, it can do one of two things:

First, it could decide to sell all its bonds at market prices to someone who's willing to buy them. This would be a terrible idea for the Chinese, since they'll lose a lot of money in this kind of fire sale. Second, it could just stop rolling over the debt and invest its foreign reserves in other kinds of bonds.

In any case what will not happen is that the US suddenly has to pay back all its debt at once. It will become more expensive for the US to refinance its debt, since the demand for treasuries will go down, but this is more of a long run problem. Also, it is not trivial to find an alternative asset market that can absorb an investment of 1200 billion dollars without prices going through the roof.