Trump says he will cease trading with top partners unless Fed lowers rates
President Donald Trump threatened to cease trading with many nations if the Federal Reserve doesn't lower rates.
(CNN) — President Donald Trump threatened on Friday to prevent the US from trading with many nations unless the Federal Reserve lowers interest rates.
“LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT, which the U.S. Supreme Court, in its ridiculous and very costly Tariff decision, strongly acknowledged ‘the President’ has an absolute right to do,” Trump said in a post on Truth Social. “IT’S BETTER THAN TARIFFS! The Fed Board, with its great new leader, must get smart – BE PATRIOTS for a change.”
A trade deficit occurs when a country imports more than it exports. At over $200 billion, the US ran its largest trade deficit with China last year, followed by Mexico and Vietnam. Overall the US ran a $1.2 trillion trade deficit with all trading partners last year, according to federal trade data.
Trump’s threat came shortly after August’s surprisingly hot jobs report showed that employers hired 162,000 new workers that month, more than double the level economists anticipated.
The strong report opens the door even wider for the Fed to hike interest rates to fight back against inflation concerns. Officials meet later this month to decide where rates should be.
The Fed declined to comment on Trump’s post.
After the jobs report was released at 8:30 a.m. ET on Friday, rate cut odds at the upcoming meeting jumped to 60% from 49% on Thursday, according to CME FedWatch.
Fed officials have sent mixed signals ahead of their two-day policy meeting beginning on September 15.
Fed Governor Michael Barr said this week he’s prepared to vote for a rate hike soon if new inflation data doesn’t indicate any progress bringing price increases back to the bank’s 2% target.
Governor Chris Waller said he’s willing to wait longer to see how the economy evolves but that he would support a hike if inflation doesn’t eventually slow.
That’s put a unique emphasis on next Friday’s Consumer Price Index report for August.
It’s not the first time this week Trump has rallied for lower interest rates, saying to reporters in the Oval Office Monday that it was “ridiculous” to talk about raising them.
“It’s ridiculous because success in growth does not cause inflation,” Trump said Monday. “Inflation’s caused for other reasons.”
This is a developing story and will be updated.
The-CNN-Wire
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CNN’s Bryan Mena contributed to this report.
