Trump Threatens to Halt Trade With Trade-Deficit Countries if Fed Keeps Rates High

Donald Trump has threatened to use trade as leverage against the Federal Reserve, saying the United States could stop trading with countries where it runs deficits if the central bank does not cut interest rates.

“Lower the interest rate, or we will stop trade with the countries with which we have deficits,” Trump wrote on Truth Social. He said strong employment data showed that the United States had much stronger credit than before and therefore deserved the lowest interest rate in the world.

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Lower the interest rate, or we will stop trade with the countries with which we have deficits.

The warning came after August nonfarm payrolls rose by 162,000, far above the market forecast of 53,000. The stronger figure increased the prospect that the Federal Reserve could keep rates high or consider raising them. Fed Chair Kevin Warsh had said the previous week that the central bank could consider a rate increase if inflation did not slow sufficiently.

The Federal Open Market Committee is scheduled to meet for two days beginning Sept. 15. The August consumer price index, due before that meeting, is expected to be a key indicator for the direction of monetary policy.

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The Federal Reserve board should become wise with a great new leader. Now be patriots.

Trump also claimed the Supreme Court had recently recognized presidential authority to halt trade in a ruling involving tariffs, calling such a move “better than tariffs.” He criticized Warsh and urged the Federal Reserve board to become “patriots,” arguing that high rates put the United States at an unfair disadvantage.

Speaking later at the White House, Trump compared U.S. rates of about 4% with rates of 0.5% in some countries and said the American rate should be 1% or 0.5%. He singled out Canada, saying the United States could save $90 billion by ending trade with it. The article says the figure was unclear, while the annual U.S. trade deficit with Canada is about $60 billion. Canada, Mexico, the European Union and China are among the countries with which the United States runs trade deficits, and American households and businesses import large volumes of goods from them.

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If we take a tough line and say we do not trade with Canada at all, we can save $90 billion.