Recently, US-Europe relations have become tense again, and Europe is contemplating how to respond to the US's new round of trade threats. Investors are starting to discuss an extreme but real countermeasure: Will Europe sell off its US assets?

The numbers are indeed staggering. The EU holds over $10 trillion in US assets, with the UK and Norway holding even more. Many of these are US Treasury bonds and stocks, some also from public sector funds. On the surface, this seems to give Europe a trump card—selling these assets could raise US borrowing costs and suppress the US stock market.

But in practice? It’s not that simple. The majority of these assets are held by private funds, with limited government control. Moreover, to be honest, Europe would also have to pay a price. Such actions would likely first harm European investors themselves. Therefore, most industry insiders believe that policymakers are unlikely to dare to do this.

Interestingly, even top strategists in the industry are beginning to openly discuss the concept of "capital weaponization." This in itself indicates that, as geopolitical dynamics reshape, similar retaliatory measures are gradually evolving into real tail risks for the market. One forex strategist bluntly stated: "The US has a large international investment deficit, which theoretically threatens the dollar, but only if foreign asset holders are willing to accept financial losses." In other words, whoever dares to act must be prepared for self-inflicted harm.