Trump Threatens to Cut Off Trade with Deficit Countries Unless Fed Acts
President Trump has threatened to halt trade with countries that run a deficit with the US if the Federal Reserve doesn't cut interest rates. The move ties together two of Trump's favorite policy levers: tariffs and monetary pressure.
The specific target he named, Switzerland, signals he's willing to aim at allies as much as adversaries. At the core of Trump's frustration is a comparison between US federal funds rate and benchmark rates in other developed economies like Switzerland.
Trump argued that the US should enjoy the world's lowest interest rates, not rates several percentage points above its trading partners. He claimed he has 'the absolute right to cut off all business with a country like Switzerland.'
The threat comes as Treasury yields have been climbing steadily, with the 10-year yield approaching 4.7% and the 30-year yield hitting levels not seen since 2007. Rising yields mean the cost of servicing the national debt, now roughly $40 trillion, keeps growing.