Trump Threatens Trade Embargo Unless Fed Cuts Rates

President Donald Trump has threatened to stop trading with countries that run surpluses against the United States unless the Federal Reserve cuts interest rates. This ultimatum ties two policies that usually have little direct connection, using access to the American market as leverage in Trump's effort to push for cheaper money.

In a tweet on Friday, Trump wrote 'LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT,' arguing an embargo could be better than tariffs. He claimed high interest rates leave the US at an unfair competitive disadvantage and urged the Fed board to get smart.

The timing made the demand awkward for Federal Reserve Chair Kevin Warsh, given the strong August jobs report, which showed employers added 162,000 jobs, nearly three times the expected 55,000. The unemployment rate remained at 4.1%, while traders increased bets that the Fed will raise rates at its Sept. 15-16 meeting.

The US goods and services trade deficit surged 24.4% in July to $88.6 billion, its highest level since March 2025. The deficits included $27.5 billion with Mexico, $23.3 billion with Vietnam, $15.2 billion with China, and $8.9 billion with the European Union.