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Trump threatens to stop trading with countries that have a trade deficit unless the Fed cuts rates
finance.yahoo.com • • general
Key Points:
- President Trump threatened to impose trade embargoes on countries with which the US has a trade deficit, urging the Federal Reserve to lower interest rates and suggesting embargoes could be "better than tariffs."
- Trump emphasized his authority under the International Emergency Economic Powers Act of 1977 to impose embargoes, although the Supreme Court ruled this act does not allow him to levy tariffs.
- The US trade deficit surged to $88.6 billion in July, the highest since March 2025, with significant deficits against Mexico, Vietnam, China, and the European Union.
- The increase in the trade deficit was partly driven by AI-related data center construction, with imports of computers and semiconductors rising sharply and construction jobs increasing by 22,000 in August.
- Trump reiterated his willingness to ban all trade with countries like Canada and criticized trade deficits as harmful to the US economy, signaling potential new trade disruptions.
