President Trump calls for Federal Reserve rate cuts, citing declining oil and food prices as evidence of no inflation, amid market turmoil triggered by his tariffs on China.
President Donald Trump has reiterated his call for Federal Reserve rate cuts, citing a lack of inflation and declining oil and food prices. ‘The recent tariffs on China have led to market turmoil, with Nasdaq futures and bitcoin experiencing significant declines.’
Oil prices are down, interest rates are down, and food prices are down, Trump stated in a Truth Social post. These economic indicators suggest that there is indeed no inflation. Furthermore, the West Texas Intermediate (WTI) crude oil price has fallen by 16% in four trading days, driven by OPEC‘s plan to boost production.
Trump‘s tariffs on several nations have led to market volatility, with futures tied to Wall Street‘s tech-heavy Nasdaq index hitting the lowest since January 2024. ‘Bitcoin fell to under $75,000 early Monday.’ The risk-off sentiment in markets is partly due to Trump‘s aggressive tariffs policy.
Tariffs are taxes imposed on imported and exported goods.
They can be used as a trade policy tool to protect domestic industries, generate revenue, or retaliate against unfair trade practices.
The World Trade Organization (WTO) regulates tariffs under the General Agreement on Tariffs and Trade (GATT).
Tariff rates vary significantly between countries, with some imposing high tariffs to shield local businesses while others maintain low tariffs to promote free trade.
The impact of tariffs is often debated, with proponents arguing they protect domestic jobs and industries, while critics claim they increase costs for consumers and stifle global economic growth.
Trump‘s bias for Fed rate cuts is consistent with market pricing for five Fed rate cuts this year. Potential Fed easing may help markets better absorb the impact of Trump‘s tariffs policy, which will likely stay here for some time. By cutting rates, the Fed can inject disinflation into the global economy.
Trump has stated that he won’t make a deal with China unless the trade deficit issue is solved. He criticized China for taking advantage of the US, stating that they have made enough for decades and are not acknowledging his warning to abuse countries not to retaliate. ‘He believes that past leaders in the US are responsible for allowing this situation to occur.’
The recent economic indicators and market trends suggest that there is indeed no inflation. Trump‘s call for Fed rate cuts may be a potential solution to mitigate the impact of his tariffs policy on global markets. However, the ongoing trade deficit issue with China remains unresolved, which could continue to affect market sentiment.
