President Donald Trump threatened to halt trade with every country running a surplus with the US unless the Federal Reserve cuts interest rates. In a post on Truth Social, Trump claimed that the US is a "stronger credit" and therefore deserves lower interest rates, citing consumer lending principles that do not apply to the Fed's federal funds rate. The article notes that the US government's borrowing costs are actually held down by foreign demand for Treasury securities, which would be reduced if trade with surplus countries were cut off. Trump made this threat just hours after a strong jobs report was released, showing 162,000 new jobs added in August and an unemployment rate of 4.1 percent.
Written by the local model on 2026-09-04,
using this article's own text rather than the other coverage of the
same event (that is the story summary below).
Story summary
President Donald Trump has threatened to halt trade with countries that run a surplus with the US if the Federal Reserve doesn't lower interest rates. In a post on Truth Social, Trump wrote "LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT." He claimed that high interest rates put the US at an unfair disadvantage, but economists and experts point out that the Federal Reserve sets interest rates independently of trade policy. The post was made after a stronger-than-expected August jobs report, which showed 162,000 new roles added to the economy. This development has contributed to growing expectations that interest rates may be increased in September, despite Trump's calls for them to be cut.
Written for “Trump's Interest Rate Demands” on 2026-09-05,
grounded in this article and the 3 other(s) covering the same event.
President Donald Trump threatened to halt trade with every country that runs a surplus with the United States unless the Federal Reserve cuts interest rates, tying together two things that are not connected by any mechanism of American economic policy.
asserted
that → threaten → policy
In a 183-word post Friday on Truth Social published hours after Bureau of Labor Statistics released a better-than-expected jobs report, Trump wrote in capital letters: "LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT."
asserted
WE → publish → DEFICIT
The president does not set interest rates, and the central bank’s Federal Open Market Committee does not set trade policy.
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Committee → set → policy
The two are handled by different institutions under different statutes, and the Fed's rate decisions are made without reference to the bilateral trade balance.
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decisions → handle → balance
Yet Trump inexplicably argued that the central bank should slash rates by comparing the Fed’s interest rate to the interest one might pay on a home mortgage, automobile loan or business loan based on one’s individual credit score.
uncertain
one → argue → score
"Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago!" he wrote.
asserted
he → lower → rates
"A STRONG COUNTRY MEANS A LOWER INTEREST RATE - IT'S A BETTER CREDIT…
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IT → mean → RATE
That is a description of how consumer lending works.
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lending → work → ?
A borrower with a higher credit score is offered a lower rate by a bank, because the bank is pricing the risk that the borrower will not repay.
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borrower → offer → that
But that process has absolutely nothing to do with the Federal Reserve’s federal funds rate, which is an administered rate the central bank sets to pursue its congressional mandate of maximum employment and stable prices.
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bank → have → employment
In short, it’s a tool for cooling or stimulating the economy, not a price quoted to the U.S. government by a lender assessing its creditworthiness.
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it → ’ → creditworthiness
The rate the government actually pays to borrow is the yield on Treasury securities, and that is set by investors in the bond market rather than by the Fed.
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that → pay → Fed
Creditworthiness does affect it.
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Creditworthiness → affect → it
But no rating agency has upgraded the United States.
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agency → upgrade → States
Moody's stripped the country of its last AAA rating in May 2025, cutting it to Aa1; S&P affirmed the U.S. at AA+ with a stable outlook in June, one notch below the top; Fitch has had the country at AA+ since 2023.
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Fitch → strip → 2023
Additionally, his threat to cut off foreign trade — something that could be beyond his authority despite his claim that a recent Supreme Court ruling would permit him to do so — would actually raise the borrowing costs he claims should be lower because of his administration’s policies.
uncertain
he → cut → policies
Countries that run trade surpluses with the United States accumulate dollars, and a large share of those dollars are recycled into U.S. Treasury securities.
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share → run → securities
That demand is one of the things that holds American borrowing costs down.
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that → hold → costs
Cutting off trade with surplus countries would reduce it.
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Cutting → cut → it
Trump’s post came hours after Bureau of Labor Statistics reported Friday that employers added 162,000 jobs in August, with the unemployment rate holding steady at 4.1 percent.
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rate → come → percent
The August gain also ran well above the average of about 31,000 a month over the previous year, reversing a summer slowdown.
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gain → run → slowdown
The federal funds target range has stood at 3.50 to 3.75 percent since December.
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range → stand → December
At the July meeting — the first full one chaired by Kevin Warsh, who was nominated by Trump, confirmed 54-45 in May and sworn in on May 22 — the committee voted 9-3 to hold.
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committee → chair → May
All three dissenters, Cleveland's Beth Hammack, Minneapolis' Neel Kashkari and Dallas' Lorie Logan, wanted a quarter-point increase.
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dissenters → want → increase
Continuing a years-long trend of publicly bullying Federal Reserve chairs over interest rates, Trump called Warsh a “great new leader” but warned that the Fed “must get smart” and urged the board to “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,” he said.
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he → continue → disadvantage
