Trump Threatens to Halt Trade With Mexico, EU Unless Fed Cuts Rates

Washington — President Donald Trump threatened Friday to stop trading with Mexico, the European Union and other economies that run trade surpluses with the United States unless the Federal Reserve lowers interest rates.

In a post on Truth Social, Trump said the U.S. should halt trade with countries with which it records a deficit, arguing that elevated interest rates put the American economy at a disadvantage.

“Lower the rate, or I will stop trading with the countries with which we have a deficit,” he wrote.

Later, speaking at the White House, Trump also referenced the trade deficits with Mexico and the EU.

Mexico’s Trade Surplus With the U.S.

According to data cited by Trump, Mexico ranked first in July 2026 among countries with the largest merchandise trade surpluses with the United States, posting a surplus of $26.31 billion.

Mexican exports to the United States reached $60.55 billion, up 33.6% from a year earlier, while Mexico’s imports from the U.S. totaled $34.24 billion, up 18.3%. Mexico remained both the largest supplier of goods to the U.S. and the largest market for U.S. goods.

Trump Cites Annual Deficit With Mexico

During his remarks, Trump said the United States runs an annual trade deficit of roughly $195 billion with Mexico. He also said the U.S. has sufficient oil and other resources, and said he does not want to disrupt trade because of his relationship with Mexican President Claudia Sheinbaum.

Trump stressed that he has a relationship of respect with Sheinbaum but maintained his threat to restrict trade if the Fed does not act.

Sheinbaum Expects Agreement With U.S.

Trump’s comments came after Sheinbaum acknowledged that the bilateral relationship has faced difficulties but expressed confidence that agreements on security and trade can be reached.

The threat returns trade between the two countries to the center of the bilateral relationship, even as Mexico remains a major U.S. trading partner.