President Trump repeatedly responded to Friday’s spectacular jobs number by threatening that, in the wake of a new rise in the US trade deficit, he could impose embargoes on disadvantaged countries. Trump posted on Truth Social, in what appeared to be a directive to the Federal Reserve, to “LOWER THE RATE OR I WILL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.” Trump, who has long expressed his desire for lower interest rates, claimed that an embargo could be “BETTER THAN TARIFFS” and wrote, “the Federal Reserve Board, with its great new leader, must get smart.” The president’s pressure on the central bank is not new, but threats of a trade embargo are. Embargoes would represent a new level of disruption to the global economy, and the president likely has the legal authority to carry them out. Later that day, speaking to reporters in the Oval Office, Trump reiterated his focus on potential embargoes, saying he had “no obligation” to allow trade and repeatedly floated the idea of banning all trade with Canada. He also criticized the United States’ trade deficit with Mexico and the European Union, stating that cutting trade would help the American economy and that he could implement an embargo with “the stroke of a pen.” President Donald Trump is seen in the Oval Office of the White House on Friday. (Kent NISHIMURA / AFP via Getty Images) · KENT NISHIMURA via Getty Images As Trump noted, the International Emergency Economic Powers Act of 1977 gives the president the power to impose an embargo in what is considered an economic emergency. But, as the Supreme Court ruled in February, it does not give the president the power to impose tariffs. The latest trade data painted an unpleasant picture for the president, who has long made zeroing trade deficits a central promise. The US trade deficit in goods and services soared in July with a new gap of $88.6 billion, the highest level since March 2025. This is a 24.4% increase from $71.2 billion in June. The data also included a country-by-country breakdown and showed continued U.S. trade deficits with many major trading partners, including Mexico ($27.5 billion deficit in July), Vietnam ($23.3 billion), China ($15.2 billion), the European Union ($8.9 billion), and many others. The growing trade deficit was driven, at least in part, by spending on building artificial intelligence data centers, which the president has often touted. On Friday afternoon, he said that if he were running a state, “I would like to have as many data centers as we can.” Computer imports rose 25% between June and July and semiconductor imports rose 10% as technology companies continued to spend heavily on facilities. AI spending also appeared to be partly driving Friday’s employment numbers, with construction jobs (many of which are for those data centers) increasing by 22,000 jobs in August. This story has been updated. Ben Werschkul is Washington correspondent for Yahoo Finance. Click here for political news related to the trade and monetary policies that will shape the stock prices of tomorrow. Read the latest financial and business news from Yahoo Finance.
