On Friday, President Donald Trump amped up his push for lower interest rates, telling his handpicked Fed Chair Kevin Warsh, whom he called "great," and the board to "get smart" and "BE PATRIOTS for a change." He paired that with a threat aimed abroad: "LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT." He added, "High interest rates put the U.S.A. at a very unfair disadvantage, and I won't allow that to happen!"
Trump argued a rate hike would not calm bond investors and spelled out where he thinks borrowing costs should be. "It doesn't reassure the bond market," he said about raising interest rates. "We should be at 1% or half-a-percent, we should not be at 4%."
He further claimed that the U.S. Supreme Court - even while overturning his earlier tariff regime - had recognized his authority to restrict trade. Any move toward embargoes would almost certainly face a legal fight, and it is not clear how that would bring down U.S. borrowing costs.
The timing was not an accident. U.S. non-farm payrolls rose by 162,000 in August and the unemployment rate held steady. That upside surprise strengthened the possibility of a rate increase at the Fed's policy meeting starting Sept. 15. Traders leaned into that view, and stocks and short-dated Treasuries slid.
Trump, who often points to rising share prices as validation of his policies, was irritated by the selloff. "We just got GREAT Numbers on Jobs, the Market should go UP, because our Credit and Economy are better but, as always, for the past 25 years, the Stock Market goes DOWN, because we're living under False Reality that if things are good, you've got to 'KILL IT' because of a 'fear' of Inflation," he wrote.
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Trump justified his warning about halting trade by citing partners he says profit from U.S. market access, naming Switzerland, Mexico and the European Union. "We have countries that are considered elite financially, like Switzerland, like others. But if we didn't trade with them, they would be bankrupt countries," he said.
"They're considered elite because we have massive deficits with them. We have the right not to trade. We have the right to put tariffs on them."
The Friday salvo highlighted his dwindling patience with the Fed, coming just a few months after Warsh succeeded Jerome Powell, whom Trump regularly criticized for his policy choices. The moment also coincides with slumping approval ratings before November's midterms, and polls indicate Americans are dissatisfied with how he has managed living costs and the war in Iran.
Trump's stance went beyond what his top White House economic adviser floated earlier in the day. Kevin Hassett said the jobs data made a pause look reasonable: "We respect the Fed's independence, but I think the argument for holding steady would be pretty strong."
For your money, here is the tension to watch: economic data pointing one way, a vocal president pushing the other, and a central bank that says it is independent. That mix can sway rate expectations, shake markets, and filter into everything from savings yields to mortgage quotes.
