President Donald Trump on Friday demanded that the Federal Reserve cut interest rates, threatening to halt trade with countries with which the U.S. runs a trade deficit if the central bank does not comply.
Trump made the comments in a Truth Social post after a stronger-than-expected August jobs report showed employers added 162,000 jobs, nearly triple the 56,000 jobs economists had forecast. The unemployment rate held at 4.1%.
Despite the strong report, the 10-year Treasury yield and mortgage rates showed little reaction.
Trump urged Fed Chair Kevin Warsh and the central bank’s board to “get smart” and lower rates, arguing that a stronger U.S. economy should translate into lower borrowing costs.
“We should have the LOWEST RATE of any country in the World, like ‘the old days,’” Trump wrote.
He then tied his call for lower rates to U.S. trade deficits, writing: “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, according to The White House. IT’S BETTER THAN TARIFFS!”
The comments come on the heels of the Jackson Hole Economic Policy Symposium, where Warsh took a hawkish stance, arguing that inflation remains stubbornly high and that the Fed is responsible for 65 months of elevated prices. After Warsh’s comments, the implied probability of a 25-basis-point rate hike at the Fed’s September meeting rose to 55.7%, up from 35.4% a day earlier, according to the CME Group’s Fed Watch.
As of Friday, the probability of a rate hike was at 58.4%.
Global monetary policy moves
Trump’s trade threat would have broad implications if carried out because the U.S. runs trade deficits with dozens of countries, including many of its largest trading partners. In late August, the U.S. imposed 50% tariffs on about $20 billion worth of Canadian goods after trade talks collapsed. Canada said it would respond with matching tariffs beginning in September.
The threats to halt trade come as other countries are imposing rate hikes and experiencing high inflation. According to a poll of economists conducted by Reuters on Sept. 3, the European Central Bank will raise interest rates on Sept. 10 for the second and final time “in what would be its shortest hiking campaign in 15 years.”
Reuters also noted that the Bank of Japan is debating a rate hike in September. The New York Times and CNBC each reported that the 10-year Japanese bond rose past 3% for the first time since 1996, and the German 10-year bond rose to 3.33% for the first time since 2011.
Trump’s ongoing feud with the Fed
Trump’s social media post also marks a renewed push by the president to pressure the central bank for lower interest rates — this time with Warsh, his hand-picked chairman, leading the Fed. The Trump administration repeatedly pressured former Fed Chair Jerome Powell to cut rates.
The pressure on Powell began shortly after Trump took office at the start of 2025. In July 2025, the president said he would “likely” fire Powell. Trump later walked back the threat and instead sought grounds to remove Powell “for cause,” citing cost overruns on renovations of the Federal Reserve headquarters.
In January, the Department of Justice served the Fed with grand jury subpoenas and threatened a criminal indictment over Powell’s Congressional testimony last summer. That probe was later dropped.
Trump has also targeted Fed governors, seeking to fire Lisa Cook in August 2025 over allegations of mortgage fraud. Cook sued and a federal judge ruled that Trump had not shown sufficient cause for her removal. A federal appeals court upheld the ruling, and Trump has asked the Supreme Court to intervene.
In late June, a Supreme Court ruling limited Trump’s ability to fire Cook without notice, requiring the administration to allow her to respond to the allegations.
Others have simply left their jobs. Fed Gov. Adriana Kugler announced her resignation in August 2025, while Fed Gov. Raphael Bostic said in November 2025 that he would retire when his term ended in February.
