What happens to the US economy if we get into a skirmish with China, between a) they make a lot of the stuff for US companies, and b) they hold a significant part of a trillion dollars in US treasury bills?I don't think much would happen to the economy. We might have a temporary shortage of poisoned toothpaste or maybe vacuum cleaners, but the total value of trade with China is a bit over $200 billion per year which is only about 2% of the U.S. gross domestic product. Furthermore, except for poisoned toothpaste, everything China makes is also made somewhere else so those other countries could probably ramp up fairly quickly to provide the required production capacity. I think the average person in the U.S. would be unaware of any problems even if trade with China stopped completely tomorrow.
Also, in a "skirmish", China would be unable to do anything with the U.S. Treasuries they hold. We would simply put a "hold" on those Treasury instruments till the "skirmish" ended. These aren't bearer bonds and you can't transfer or redeem them without the knowledge and permission of the U.S. government (or you can "transfer" them, but the buyer is taking the risk that the U.S. decides to never redeem them).
Many people seem awfully afraid of China. I'm not. I'm more afraid for the Chinese. I think they're a very corrupt and backwards country with some very large and potentially very violent hurdles to overcome in order to become part of the 1st world. I wish them luck and I'm not at all concerned about any potential future skirmishes between China and the United States.