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Trump threatens to halt trade with deficit countries unless Fed cuts rates

financeSep 4, 2026971,025

After touting Friday’s blowout jobs report, President Trump said he will stop trading with countries the United States runs trade deficits with unless the Federal Reserve lowers interest rates, framing the demand as leverage to shrink the deficit. Analysts point to a recent surge in the US goods deficit, which rose 24.4 percent to $88.6 billion in July, a jump officials linked to strong US demand and AI-related investment that boosted imports. Trump tied the policy threat to Fed action, saying lower rates and a weaker dollar would reduce the deficit; he warned he would impose trade measures that slash imports if the Fed does not move. News outlets including the New York Times ran headlines characterizing the comments as a direct threat to halt some trade unless the Fed cuts rates. Commenters and analysts in online posts said the proposal misunderstands trade deficits, arguing that cutting off trade would not simply erase bilateral deficits and could disrupt supply chains and consumer goods flows. The statement raises the prospect of unilateral US trade restrictions targeted at countries with bilateral deficits and sets up a new flashpoint between White House trade rhetoric and Federal Reserve independence.

MeidasTouch
@meidastouch.com

TRUMP THREATENS THE FED: Trump just told the Fed in a post that he will stop trading with countries where the U.S. runs a trade deficit unless it lowers interest rates. Meanwhile, there is now a greater likelihood of a Fed rate hike due to inflation fueled by Trump’s tariffs and the Iran war.

8913h ago
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