Trump Threatens Trade Halt Unless Fed Cuts Rates Amid Strong Jobs Report

US President Donald Trump has threatened to halt trade with countries that have a trade deficit with the US if the Federal Reserve does not lower interest rates. In a series of posts on Truth Social, Trump argued that high interest rates put the US at a 'very unfair disadvantage', which he won't allow. He claimed that lower borrowing costs would strengthen the US economy, boost growth, and improve the country's financial situation.

The threat comes after a better-than-expected US employment report revealed that the US economy added 162,000 jobs in August, far exceeding economists' estimates of around 53,000-55,000 jobs. The unemployment rate stayed at 4.1%. Trump cited this report to claim an economic boom under his administration.

The impact of a trade halt would be significant, with market experts and economists warning that it could lead to a supply freeze, sudden surge in inflation, and put pressure on the US economy. The US has trade deficits with many of its largest trading partners, including China, Mexico, and Vietnam, with a total deficit of approximately $1.2 trillion in FY24-26.