Trump's Hesitant Stance on the Fed: Fed Chair Jerome Powell Tariff Worries and Policies

Donald Trump’s relationship with Federal Reserve Chair Jerome Powell has always been a bit of a rollercoaster. Though Trump appointed Powell in 2017, the two have frequently clashed—especially when it comes to interest rate decisions and the broader economic fallout from tariff policies. 

Now, as tariffs take center stage again in 2025, Trump’s criticism of Powell has returned to the spotlight. But despite the heated rhetoric, Trump recently indicated he might not follow through on threats to remove Powell. So, what’s really going on here? And how does it affect US economic policy?

A Rocky Start: How the Trump-Powell Rift Began

When Jerome Powell was nominated by Trump and confirmed by the Senate, their relationship seemed promising. That changed quickly once the Fed started raising interest rates in 2018 to rein in inflation. 

Trump wasn’t shy about expressing his disapproval. He publicly slammed Powell, calling his approach “way off base” and accusing the Fed of undermining his economic agenda. At one point, Trump even claimed he had better economic instincts than the Fed—a clear sign that tensions were more than just political theater.

Tariffs, Inflation, and the Fed’s Balancing Act

Tariffs have been a cornerstone of Trump’s economic strategy, particularly in his trade battles with China. While aimed at protecting American industries, these tariffs have also pushed up prices on consumer goods—adding inflationary pressure that complicates the Fed’s job.

Powell has acknowledged that tariffs are a key driver of economic uncertainty, making the case for a more measured approach to rate cuts. Trump, on the other hand, insists that inflation fears are overblown, citing declines in gas and grocery prices, and continues to demand aggressive rate cuts to stimulate growth.

Trump’s Mixed Messages on Powell’s Future

Trump’s public attacks on Powell have been blunt. He’s labeled him “too late” and even a “major loser” for not slashing rates fast enough. But recently, he’s softened his stance—at least slightly. Trump clarified that he has “no intention of firing” Powell, a move likely aimed at calming market jitters fueled by speculation. Still, the pressure remains. Trump continues to call for rapid rate cuts, keeping investors, analysts, and policymakers in suspense about what he might do next.

Can Trump Even Fire Powell?

While Trump’s threats make headlines, legally firing Powell isn’t straightforward. The Federal Reserve was designed to be independent, and the chair can only be removed for cause—such as misconduct or dereliction of duty—not just for policy disagreements. 

The Supreme Court is currently reviewing cases that could redefine presidential power over agencies like the Fed, but any attempt to remove Powell now would face serious legal hurdles and almost certainly trigger market backlash. Trump’s advisors have warned him that firing Powell could cause financial chaos and hurt his own economic goals.

Conclusion

Trump’s ongoing feud with the Federal Reserve and Jerome Powell highlights the tension between political agendas and economic independence. While Trump pushes for lower rates to offset tariff-induced economic strain, Powell continues to emphasize the importance of inflation control and long-term stability. Whether this uneasy truce holds—or turns into another clash—will have major implications for US monetary policy, markets, and global confidence in American economic leadership.

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FAQ

Why has Trump criticized Fed Chair Jerome Powell?
Trump believes Powell has been too slow to cut interest rates and has blamed him for hindering economic growth, especially in light of inflation concerns linked to tariffs.

Can Trump fire Jerome Powell?
No, not without legal cause. The Federal Reserve is an independent body, and Powell’s removal over policy disagreements would likely spark legal and political backlash.

How do tariffs affect the Fed’s decisions?
Tariffs increase the cost of goods, leading to inflation and uncertainty—both of which complicate the Fed’s interest rate decisions.

Has Trump actually planned to remove Powell?
While Trump has made threats in the past, he recently said he doesn’t intend to fire Powell, possibly to avoid roiling the markets.

What is the Fed’s current stance on interest rates?
The Fed remains cautious about cutting rates too quickly, prioritizing inflation control despite political pressure to stimulate growth.