Trump threatens trade halt unless Fed cuts rates

President Donald Trump intensified pressure on the Federal Reserve to lower interest rates, threatening to cut off trade with certain economies with which the U.S. has a deficit if the central bank does not act. Trump issued his demands Friday in a social media post after a stronger-than-expected August jobs report, which could bolster the case for Fed officials to raise rates at their next policy meeting.

In his post, the president exhorted his hand-picked Fed Chairman Kevin Warsh and board members to "get smart" and "BE PATRIOTS for a change." "LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT," Trump posted. "High interest rates put the U.S.A. at a very unfair disadvantage, and I won’t allow that to happen!"

The Fed has kept rates steady since December as it tries to discern whether recent economic turbulence represents a short-term problem or a longer-term driver of higher prices. Policymakers have signaled they are considering whether to raise rates, after failing for more than five years to bring inflation down to the central bank’s 2% target. Trump insisted Friday that the U.S. economy was "STRONG" and, as a result, could afford to lower borrowing costs, a move that could worsen inflation.

Trump cited the addition of about 162,000 jobs in August as evidence of a strong economy. However, some economists see surging domestic demand, partly for electronics powering artificial intelligence, as a driver of the trade deficit. Trump disagrees and has sought to apply tariffs globally to reduce the imbalance. His remarks represent a resumption of his pressure campaign against the Fed, even after securing Warsh's confirmation as chair.