President Donald Trump on Friday doubled down on his threat to cut off trade with countries that have surpluses with the U.S. unless the Federal Reserve cuts interest rates.
“What I’m saying, very simply, is that we should be paying the lowest interest rate in the world,” Trump said in the Oval Office.
He had been asked about his Truth Social post earlier in the day declaring, “LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.”
Trump issued that sweeping ultimatum after urging the Fed and its chairman, Kevin Warsh, to “get smart” and cut rates following a much-stronger-than-expected monthly jobs report.
Read Trump’s full post:
Great jobs number just announced, breaking all estimates (except mine!) by double and triple – And you haven’t seen anything yet! EMPLOYERS ADDED 162,000 JOB IN AUGUST. Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago! A STRONG COUNTRY MEANS A LOWER INTEREST RATE – IT’S A BETTER CREDIT…Very simple! We should have the LOWEST RATE of any country in the World, like “the old days.” Without the United States agreeing to allow them their big surpluses, and we could stop that immediately, they would no longer be considered financially ELITE! LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT, which the U.S. Supreme Court, in its ridiculous and very costly Tariff decision, strongly acknowledged “the President” has an absolute right to do. IT’S BETTER THAN TARIFFS! The Fed Board, with its great new leader, must get smart – BE PATRIOTS for a change. High interest rates put the U.S.A. at a very unfair disadvantage, and I won’t allow that to happen! President DONALD J. TRUMP
https://www.cnbc.com/2026/09/04/trump-fed-rates-jobs-trade.html
August jobs report gives Trump another argument for cuts
The U.S. added just 22,000 jobs in August, while June and July payroll estimates were revised down by a combined 37,000. The unemployment rate reached 4.3%, its highest level since 2021.
https://www.bls.gov/news.release/empsit.nr0.htm
Trump says Powell’s failure to cut rates is hurting the economy
Trump again attacked Fed Chair Jerome Powell, arguing that high rates are damaging economic growth. The pressure comes while inflation remains above the Fed’s 2% target, making the political demand for cuts more complicated.
https://www.cnbc.com/2026/09/04/trump-fed-rates-jobs-trade.html
Foreign investors are already reducing Treasury exposure
Norway’s $2.3 trillion sovereign wealth fund proposed cutting its benchmark allocation to government bonds from 70% to 50%, potentially reducing its U.S. Treasury holdings by roughly $80 billion.
The Fed controls short term rates, but Treasury yields are also determined by investors. If foreign governments respond to Trump’s trade threats by buying fewer Treasuries, Washington could end up with lower Fed rates but higher long term borrowing costs.
That would completely undermine the objective.