Recently, Trump blasted Federal Reserve Chairman Jerome Powell on social media: "The European Central Bank is cutting rates for the seventh time, while Powell, this slowpoke who keeps making misjudgments, has created a mess! Oil prices, food, and egg prices are falling, and with the U.S. tariff revenues being substantial, he should have cut rates long ago, and now he must act! Get him out!" Trump's anger was directed at Powell, igniting a fierce confrontation between the White House and the Federal Reserve, revealing years of animosity between the two.
This "love-hate" story is both dramatic and reflects the complex game of power and policy.
The feud between Trump and Powell began in 2018 when Trump nominated Powell as Federal Reserve Chairman, succeeding Janet Yellen. Initially, Trump had high hopes for Powell, believing he would continue the low-interest-rate policy and support his economic stimulus plans. However, shortly after Powell took office, the Federal Reserve began raising interest rates in 2018 to curb inflation risks. This decision was contrary to Trump's economic vision, igniting their first public conflict.
During Trump's first term from 2018 to 2020, he repeatedly criticized Powell through Twitter (X) and in public, calling him an "idiot" and even threatening to fire him. In 2019, Trump stated in an interview that Powell was "the biggest enemy" because the rate hikes hindered economic growth. Nevertheless, Powell consistently emphasized the independence of the Federal Reserve, refusing to yield to political pressure. He repeatedly stated in press conferences that the Fed's policies were based on economic data, not White House directives.
After Trump was re-elected in 2024, this feud quickly escalated. Upon returning to the White House, Trump made economic stimulus and tariff policies central to his agenda, calling for the Federal Reserve to significantly cut rates to mitigate the potential impact of tariffs on prices. However, the Federal Reserve, led by Powell, maintained interest rates at 4.25%-4.5% in December 2024 and March 2025, arguing that Trump's tariff plans could raise inflation and hinder the rate-cutting process.
In April 2025, Trump's attacks on Powell reached a peak. On April 17, Trump told reporters in the Oval Office, "If I want him out, believe me, he will be out quickly." This statement caused market turmoil, with the S&P 500 index having already plummeted 4.8% in early April due to tariff policies, marking the largest single-day drop since 2020. Trump's threat was not only aimed at Powell personally but was also a direct challenge to the independence of the Federal Reserve.
Powell responded with his usual calmness. In a press conference in November 2024, he clearly stated that even if Trump asked him to resign, he would not leave voluntarily, and the law does not allow the president to dismiss the Federal Reserve Chairman at will. In March 2025, Powell reiterated in a speech at the University of Chicago Booth School of Business that the Fed's policy decisions were based on economic data, not political pressure. He specifically pointed out that Trump's tariff policies could lead to rising inflation, forcing the Fed to delay rate cuts.
The conflict between Trump and Powell centers on the independence of the Federal Reserve. Since its establishment in 1913, the Fed has been designed as an institution independent of political interference to ensure that monetary policy is based on long-term economic goals rather than short-term political demands. However, Trump's words and actions challenge this tradition. He believes the president should have the authority to influence monetary policy and even proposed establishing a "shadow" Federal Reserve Chairman to undermine Powell's authority.
Peter Conti-Brown, a professor at the Wharton School of the University of Pennsylvania, stated that Powell's strong statements represent the collective will of the Fed's leadership to defend the principle of independence. Ian Katz of Capital Alpha Partners warned that if Trump forcibly dismissed Powell, it could trigger severe turmoil in the financial markets, leading to a stock market sell-off.
Meanwhile, Trump's tariff policies have exacerbated the Fed's decision-making dilemma. Trump plans to implement "reciprocal tariffs" on April 2, 2025, in response to trade partners' restrictions on U.S. products. This could raise prices, forcing the Fed to maintain high interest rates, contrary to Trump's calls for rate cuts. Against the backdrop of the European Central Bank's recent consecutive rate cuts, Trump accused Powell of being "slow to react" and even linked him to the Democrats, attempting to politicize economic issues.
Despite the ongoing conflict, Trump's relationship with Powell is not entirely adversarial. In June 2024, Trump stated that if Powell "does the right thing," he would allow him to complete his term, which expires in 2026. This statement indicates that Trump's threats are more about exerting pressure than genuinely pushing for dismissal. Powell has also avoided directly countering Trump, instead defending his position through economic data and legal grounds, maintaining a delicate balance.
However, this balance is exceptionally fragile. In February 2025, The Wall Street Journal reported that Trump had privately discussed removing Powell and had consulted former Fed governor Kevin Warsh about a potential replacement. If Trump pushes for dismissal, he would face legal restrictions from the Supreme Court regarding the "Humphrey's Executor case," which could trigger a constitutional crisis.
The feud between Trump and Powell not only affects the United States but also impacts global markets. The European Central Bank is expected to cut rates for the seventh time in 2025 to stimulate a sluggish economy, while the Federal Reserve's cautious stance has led to the appreciation of the dollar against the euro, further exacerbating Trump's dissatisfaction. Trump believes that the Fed's high-interest-rate policy undermines the competitiveness of U.S. exports, contradicting his "America First" trade goals.
The conflict between Trump and Powell is a struggle between power and principles. Trump attempts to reshape the Fed's policy direction with a hardline stance, while Powell defends economic rationality with independence as his shield. Their "love-hate" relationship is not only about personal grievances but also a test of the American economic system.
This article represents the author's personal views and does not reflect the stance or views of this platform. This article is for informational sharing only and does not constitute any investment advice to anyone.
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