Trump Threatens to Halt Trade With Surplus Countries Unless Fed Cuts Interest Rates

President Donald Trump said on Friday that he would halt trade with countries with which the United States has a trade deficit unless the Federal Reserve cuts interest rates, issuing the demand in a lengthy social media post after a stronger-than-expected August jobs report. "High interest rates put the U.S.A. at a very unfair disadvantage, and I won't allow that to happen!" Trump wrote, telling the Fed to "LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT."

Trump argued an embargo could be "better than tariffs" and called on "the Fed Board, with its great new leader" to act. Pressure on the central bank from the president is not new, but the threat of a trade embargo marks a new level of disruption for the global economy; the president likely has the legal authority to follow through. The stronger jobs data could bolster the case for the Fed to hold or raise rates at its policy meeting beginning September 15, setting up a potential clash between the White House and the central bank.