President Trump escalated his feud with the Federal Reserve, warning he will halt trade with countries the US runs a deficit with unless the central bank lowers interest rates. The threat follows an August jobs report the president called stronger than expected, and echoes a similar warning he made in August naming Switzerland directly.
Trump fired off the threat in a social media post reacting to the latest jobs report, which showed employers added 162,000 jobs in August, a number he said far exceeded forecasts. He tied the strong print directly to his demand for lower rates, arguing a stronger US credit position justifies cheaper borrowing.
The threat, in his words
He argued a stronger economy should come with lower borrowing costs and warned Washington could cut off trading partners that run surpluses with the US. "LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT", Trump posted, framing the move as preferable to tariffs. Despite the rhetoric, the market read the jobs data as less hawkish than initially expected, and the US dollar gave back most of its gains.
Not the first time
The warning follows a similar threat Trump made on August 19, when he said the US should stop doing business with countries running a trade deficit with it if the Fed keeps rates where they are, naming Switzerland specifically. He pointed to the gap between the US federal funds rate of roughly 3.5-3.75% and Switzerland's benchmark rate of around 0-0.5% as evidence American borrowers pay too much relative to other developed economies.
That August comment came as Treasury yields climbed, with the 10-year approaching 4.7% and the 30-year hitting levels not seen since 2007, pushing up the cost of servicing a national debt of roughly $40 trillion. The Fed, under Chair Kevin Warsh, a Trump appointee, has been reluctant to cut rates while inflationary pressures persist.
Tariffs have already featured in the same fight: Swiss goods faced tariffs that peaked at 39% before falling to 15% once Swiss firms committed to new US investment. That precedent is the closest guide to what a trade halt over interest rates could look like in practice.
Sources: Investinglive, Crypto Briefing
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