USA17 September, 20262 min read
Donald Trump Threatens To Stop Trading With U.S. Deficit Countries Unless Federal Reserve Cuts Rates
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Trump threatened to halt trade with deficit countries unless the Fed cuts interest rates. He insisted the United States should have the world's lowest interest rates.
Trump ties trade to rates
U.S. President Donald Trump said on Friday that unless the Federal Reserve cut interest rates, he would stop trading with countries with which the United States had a deficit.
In a Truth Social post, Trump wrote, “LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT,” and Reuters reported he linked the threat to the Fed’s rate decision.
Reuters said the Bureau of Labor Statistics reported stronger-than-expected job creation in August, prompting traders to boost bets on a hike later this month.
CNBC reported Trump doubled down in the Oval Office, saying, “What I'm saying, very simply, is that we should be paying the lowest interest rate in the world,” after being asked about his Truth Social post earlier in the day.
CNBC also reported Trump urged the Fed and its chairman, Kevin Warsh, to “get smart” and cut rates after a much-stronger-than-expected monthly jobs report.
Fed pressure and competing signals
CNN said Trump’s threat came shortly after August’s surprisingly hot jobs report showed U.S. employers hired 162,000 new workers that month, more than double the level economists anticipated.
CNN reported that after the jobs report was released at 8:30 a.m. ET on Friday, rate hike odds at the upcoming meeting jumped to 60% from 49% on Thursday, according to CME FedWatch.
CNN quoted Fed Governor Michael Barr saying he’s prepared to vote for a rate hike soon if new inflation data doesn’t indicate any progress bringing price increases back to the bank’s 2% target.
CNN also cited Fed Governor Chris Waller saying he’s willing to wait longer to see how the economy evolves but that he would support a hike if inflation doesn’t eventually slow.
CNN reported the Fed declined to comment on Trump’s post, and Trump told reporters in the Oval Office, “I speak with him, yeah,” about Chairman Kevin Warsh.
Legal backdrop and next meeting
Trump’s trade threat was framed alongside his criticism of the U.S. Supreme Court’s tariff decision, with CNN quoting his Truth Social language that the court “strongly acknowledged ‘the President’ has an absolute right to do,”.
Reuters reported Trump said, “We should have the LOWEST RATE of any country in the World ... LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT,” in the same Truth Social post.
CNBC reported the Fed declined to comment on Trump’s post and said the White House did not respond to CNBC’s request for additional information.
CNN said officials meet later this month to decide where rates should be, and it described the strong jobs report as opening the door even wider for the Fed to hike interest rates to fight back against inflation concerns.
SCMP reported Trump intensified pressure on the Federal Reserve to lower interest rates and warned that the next policy meeting could start on September 15, while noting it was unclear how trade cutoffs would help lower U.S. borrowing costs.