Trump Threatens Trade Halt Over Fed Interest Rates
Former US President Donald Trump has threatened to halt trade with countries running surpluses against the United States if the Federal Reserve does not lower interest rates. He made this demand on social media and during a White House press conference, citing a Supreme Court ruling that he believes gives him absolute authority to do so.
Trump specifically mentioned Canada as an example of a country with which the US runs a trade deficit, claiming that ending all trade with Canada would save $90 billion. He compared this to the benefits of tariffs and argued that rate cuts would be more effective in protecting American interests.
The timing of Trump's demand is notable, coming on the heels of a strong August jobs report that showed 162,000 nonfarm payrolls, the largest gain in five months. However, markets appeared to interpret this data as a reason to anticipate tighter monetary policy, with the CME FedWatch tool reflecting a 58.2% probability of a rate hike at the September Federal Open Market Committee meeting.
Within the Federal Reserve, there are signs of caution, with Governor Christopher Waller indicating that he might support holding rates steady at the upcoming FOMC meeting due to signs of disinflation and declining core inflation rates.