President Donald Trump threatened Friday to stop trading with countries running trade surpluses with the United States unless the Federal Reserve moves to lower interest rates.
Trump issued the warning on Truth Social after celebrating newly released August employment figures and urging recently installed Federal Reserve Chairman Kevin Warsh to reduce rates.
“Great jobs number just announced, breaking all estimates (except mine!) by double and triple – And you haven’t seen anything yet!” Trump wrote.
“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!” he continued.
Trump argued that America’s economic strength should give the country access to lower borrowing costs than any other nation.
“A STRONG COUNTRY MEANS A LOWER INTEREST RATE – IT’S A BETTER CREDIT…Very simple!” Trump wrote in a subsequent post.
The president said the United States should have “the LOWEST RATE of any country in the World” and argued that countries running large trade surpluses with America would no longer be considered financially elite without access to the U.S. market.
“LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT,” Trump warned.
He said such a move would be “BETTER THAN TARIFFS” and argued that a recent Supreme Court tariff decision had acknowledged the president’s authority to take that action.
Trump also called on the Federal Reserve Board and Warsh to “get smart” and “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!” the president declared.
Elevated interest rates continue to increase the cost of servicing the national debt, which surpassed $40 trillion in August. The country now faces a monthly interest payment of $96 billion.
Trump has long built his economic agenda and political campaigns around the argument that trade deficits are harmful. However, most economists disagree with the idea that such deficits are always negative.
A trade deficit occurs when a country buys more goods from another nation than it sells to that trading partner.
The Federal Reserve Bank of Dallas addressed the issue in an article published last year, concluding that trade deficits are not inherently harmful.
The article said deficits reflect foreign capital entering the country and can help support domestic investment or fiscal expansion. It also said they can provide greater flexibility for an open economy to absorb domestic and international shocks without interest-rate increases.
Many of the world’s wealthiest countries and largest economies operate with trade deficits because they have strong local currencies and high levels of domestic consumption.
The U.S. trade deficit has increased in recent months, largely because of imports connected to data center expansion. Trump has remained an outspoken supporter of data center development despite criticism of the industry from some members of the Republican Party.
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