WASHINGTON, D.C. — In a move that financial markets have described as “bold” and that at least one major airline has described as “a problem,” the President on Friday proposed that the United States could do “tremendous good for ourselves” by simply not trading with the countries that run trade surpluses against us, unless those countries agree to let the Federal Reserve cut interest rates.

The President, speaking from the Oval Office and referring to the trade surplus as “something that’s been happening for a long time, and nobody’s done anything about it, which is a disgrace,” said the solution was “pretty simple.”

“We could do tremendous good for ourselves by just not trading with them,” the President said. “And they’d come to us, and they’d say, ‘Please, we need to trade with America.’ And they’d cut the rates. And we’d win. We’d win beautifully.”

The remarks came a day after the President threatened to halt trade with specific economies unless the Federal Reserve moved on interest rates, according to the Los Angeles Times. The proposal effectively bundles the nation’s trade policy with its monetary policy and the Federal Reserve’s interest rate decisions into a single negotiating package, a move economists have spent the weekend trying to find a name for.

“It’s not a tariff. It’s not a sanction. It’s a whole new category of economic instrument. We’ve just invented it, and it’s going to be great.”

The Federal Reserve, which has been signaling a possible rate hike this month in response to a strong jobs report, has not commented on the proposal. Fed Chair Kevin Warsh, who was described by the President as a “great guy” and “doing a great job,” has in recent weeks urged the market to watch the inflation data, which is trending in a direction that would make a rate hike more likely, not less.

"The President believes that by not trading, we will trade more. I have never fully understood the logic, but I have also never fully understood the Federal Reserve, and I have been following them for thirty-one years."

A number of trade partners responded within the hour. Canada issued a statement expressing “concern” and noting that it runs a trade deficit with the United States, a detail the White House appeared not to have considered. Japan said it was “reviewing its options,” which in diplomatic terms is a stronger statement than it sounds. The European Union issued a four-paragraph statement, the third of which was a single word: “No.”

THE PROPOSAL, AT A GLANCE

  • Step One: Stop trading with countries that run a surplus.
  • Step Two: Wait for them to call.
  • Step Three: Make them cut interest rates as a condition of resuming trade.
  • Step Four: Win.

Economists at three separate universities confirmed the plan works on paper. All three are still employed, a fact the White House declined to comment on.

The President has previously called interest rates “artificially high” and insisted the United States should have “the lowest interest rates in the world,” a position USA Today reported was reaffirmed this month as the Federal Reserve grew more wary of inflation. The new trade angle appears designed to add a second pressure point, in case the first one wasn’t working.

Treasury Secretary Scott Bessent, asked on a Sunday-morning radio program whether the administration had a plan for the approximately $400 billion in goods that currently moves between the United States and its surplus partners, said, “We have a very thorough plan.” When asked what the plan was, the Secretary said, “I can’t get into all of the details, but I will tell you that it’s very detailed, and it’s very good.”

At press time, the President had not yet responded to a question about what happens in the event a surplus country refuses to cut rates and also refuses to stop trading. “I think they’ll trade,” the President said, before adding, “and if they don’t, that’s fine too. That’s fine.”