President Trump on Wednesday said interest rates should be as low as 1% in the U.S. and revived his proposal to stop trading with a long list of foreign nations.
Mr. Trump’s social media post was an implicit rebuke to the Federal Reserve, which raised interest rates for the first time in three years in an attempt to control inflation.
“Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World — by far. Our Country is booming with new Investment!” Mr. Trump wrote on Truth Social.
The Federal Open Market Committee voted Wednesday for a 0.25-percentage-point increase in its benchmark rate, raising it to 3.75%-4.0%.
Mr. Trump did not scold his handpicked chairman, Kevin Warsh, by name or make any tangible threats.
But he did revive an unusual idea – cutting off trade with countries that sell plenty of products to the rich U.S. market, but do not buy nearly as much from American producers.
“If we stopped Trading with every country that we have a Deficit with, which is most of them, we would make, at least, 1.5 Trillion Dollars a year,” he said. “The word ‘Deficit’ is nothing more than a fancy word for LOSS. We are ‘carrying’ almost every country in the World, and that cannot go on any longer.”
The U.S. runs trade deficits with most of its leading partners, including Canada, China, Mexico and the European Union, so cutting off trade would be an extreme step.
Closing trade deficits is a long-time fixation for Mr. Trump, who says it is a sign that countries are ripping off the U.S. to the detriment of American workers.
Some economists say trade deficits are not inherently bad, since Americans may prefer overseas products or benefit from lower prices on those goods.
Mr. Trump wanted to see Mr. Warsh usher in an era of lower interest rates when he selected him to replace Jerome Powell as chair earlier this year.
However, Mr. Warsh and other central bankers raised rates Wednesday because the Iran war and other factors kept inflation running above its target rate of 2%.
Mr. Trump did not accept that line of thinking, writing in all capital letters an exhortation to “lower the interest rates for the United States of America, and fast!”
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