Trump threatens to halt trade deficits unless Fed cuts interest rates

President Donald Trump announced on Truth Social that the United States will cease trade with nations that maintain a trade deficit unless the Federal Reserve reduces interest rates. His statement came after employment data showed a larger-than-expected job increase, which had boosted forecasts of a rate hike to combat persistent inflation. Trump argued that a stronger credit rating warrants the lowest global rates and referenced a Supreme Court ruling that he claims gives the president absolute authority to halt such trade.

He also reiterated his earlier appointment of Kevin Warsh to succeed Jerome Powell, expecting Warsh to be more inclined toward cuts, though the Fed has held rates steady and Warsh delivered a hawkish speech last month. The president’s ultimatum marks a departure from the traditional separation between the White House and monetary policy and could complicate the Fed’s decision-making and affect international trade relations.