Trump would plunge the US into crisis if he carried out his latest bizarre threat

September 7, 2026 — 11:58am

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Last Friday Donald Trump threatened to stop all trade with countries that have trade surpluses with the US ... unless the US Federal Reserve Board cuts interest rates.

It is doubtful whether Trump has the power to carry out that threat or whether the Fed would take any notice of it. He also doesn’t appear to appreciate that, if he were able to do what he is threatened to do, the US would almost certainly be plunged into recession, if not depression.

Trump posted the bizarre threat on Truth Social (naturally) after payroll numbers showed a better than expected number of jobs were added in August.

“Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago! A STRONG COUNTRY MEANS A LOWER INTEREST RATE – IT’S A BETTER CREDIT...VERY SIMPLE!,” he wrote.

“We should have the LOWEST RATE of any country in the World, like the ‘old days’,” he said.

The US, with $US40 trillion ($55.5 trillion) of government debt, a fiscal deficit of about 6 per cent of GDP and an inflation rate of 3.7 per cent isn’t a strong credit – it is a rapidly deteriorating one – which is why investors in US Treasury securities have been pushing US bond yields up to near six-year highs.

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The Trump administration’s profligacy – he’s added more than $US3.8 trillion to the debt in less than 18 months – his inflation generating trade war on the rest of the world and his real war in the Middle East have added risk premiums to the yields on US government securities.

“LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT, which the U.S. Supreme Court, in its ridiculous and very costly Tariff decision, strongly acknowledged “the President” has an absolute right to do. IT’S BETTER THAN TARIFFS! The Fed board, with its great new leader, must get smart -- – be PATRIOTS for a change. High interest rates........

© The Sydney Morning Herald