Trump Threatens Trade Action Over Fed Rate Cuts

President Donald Trump threatened to halt trade with countries running trade surpluses with the United States unless the Federal Reserve lowers interest rates, escalating his pressure on the central bank and raising concerns about its independence. His demand followed an unexpectedly strong August jobs report showing 162,000 new positions, though wage growth weakened; rising gasoline and diesel prices also increased concerns about household purchasing power and transportation costs. Commerce Secretary Howard Lutnick predicted that stronger growth, tariff revenue and a narrowing federal deficit would cause rates to stabilize and decline over the next six months, while Treasury Secretary Scott Bessent has likewise forecast lower rates after the Iran conflict ends and said AI investment could have a significant disinflationary effect. The Federal Reserve has paused further cuts amid internal disagreement, while inflation concerns, geopolitical uncertainty and bond-market movements have kept long-term yields elevated even as the average 30-year mortgage rate recently dipped to 5.99%. Trump’s proposed trade action could face legal challenges, and markets remain focused on whether economic strength and inflation risks will limit the pace of monetary easing.