Trump Issues Stark Threat To Federal Reserve: “Lower The Rate Or I’ll Stop Trading With Countries With Which We Have A Deficit”

President Donald Trump threatened to halt trade with all deficit countries if the Federal Reserve refuses to cut interest rates, citing a Supreme Court ruling that actually removed his tariff authority. Markets reacted with 10-year Treasury yields surging to a one-year high of 4.79% after Friday's jobs report, indicating traders anticipate fewer rate cuts.

However, Trump's own Federal Reserve Chair, Kevin Warsh, warned the Fed needed to address inflation, fueling speculation of rate hikes. Trump's ultimatum came in a Truth Social post following a stronger-than-expected August jobs report, which showed the U.S. economy added 162,000 jobs, more than double economists' expectations. While Trump claimed the court agreed with his right to impose tariffs, the Supreme Court's ruling actually limited his power to do so.

The strong labor market raised concerns about the likelihood of near-term rate cuts, as the Fed's target range is capped at 3.75%.