Trump threatens to cut trade with some countries if Fed doesn’t lower rates
President Trump has threatened to halt trade with countries holding a trade deficit with the U.S. if the Federal Reserve does not lower interest rates. This move marks a return to aggressive pressure on the central bank amid concerns over economic performance and upcoming elections.
Why it matters
Highlights the potential for significant disruption to global trade policy and the independence of the Federal Reserve.
President Donald Trump intensified pressure on the Federal Reserve to lower interest rates, threatening to cut off trade with certain economies with which the US has a deficit if the central bank does not act.
Trump issued his demands on Friday in a lengthy social media post after a stronger-than-expected August jobs report, which could bolster the case for Fed officials to raise rates at their next policy meeting starting September 15.
In his post, the president exhorted his hand-picked Fed Chairman Kevin Warsh, whom he called “great”, and board members to “get smart” and “BE PATRIOTS for a change”.
“LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT,” Trump posted. “High interest rates put the U.S.A. at a very unfair disadvantage, and I won’t allow that to happen!”
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