Trump Threatens to Cut Off Trade with Countries Over Deficits Unless Fed Cuts Rates

President Donald Trump has threatened to cancel trade with countries that have a deficit unless the Federal Reserve cuts interest rates. He made this statement on Truth Social, citing the strong jobs report and claiming that the U.S. is a stronger credit than before.

In his post, Trump emphasized that high interest rates put the country at an unfair disadvantage, but economists argue that stopping trade with countries with a deficit would be catastrophic for the economy.

The Federal Reserve is independent of the President's control and has consistently stated that it will not be swayed by political pressure. Former Fed Chair Jerome Powell has even said he would stay on beyond his term due to Trump's lawsuits and threats, which could give him a vote if he chooses to participate in future decisions.

The countries with which the U.S. would need to stop trading include Mexico, Canada, Japan, Taiwan, Germany, China, South Korea, Vietnam, Italy, and France, among others. The potential consequences of such an action are dire, with trade deficits leaping 24.4 percent in August, the highest on record excluding tariff distortions.