By Editor-in-Chief, Timothy Gocklin, MBA, MSF
Trump Continues War of Words With Fed Chairman Powell Over Tariffs and Rate Policy
April 17, 2025 — In a blistering post on Truth Social, former President Donald Trump assailed Federal Reserve Chairman Jerome Powell, writing that “termination cannot come fast enough.”
The remarks come amid building tensions over the Fed’s response to Trump’s hawkish tariff policy, which Powell warned could lead to a treacherous economic trade-off between controlling inflation and stability in growth.
This emerging feud between Powell and Trump underlines growing economic uncertainty as the winner of the 2024 election now faces mounting pressure from Wall Street, policymakers, and global markets.
Trump’s Post: “Always Too Late and Wrong”
Trump’s words are among his harshest criticism of Powell so far. Referencing him as “always TOO LATE AND WRONG,” Trump criticized the Fed chairman for refusing to lower interest rates in sync with international norms—naming specifically the recent spate of reductions by the European Central Bank (ECB).
“The ECB just cut interest rates for the seventh time this year. Powell sits on his hands as the American people hurt. His firing can’t come soon enough,” Trump tweeted.
Those remarks constitute a new effort by Trump to pressure the central bank to take more aggressive action to reduce borrowing costs as he pursues aggressive economic policies—including sharp tariffs on imported goods.
Powell’s Warning: Tariffs Could Fuel Stagflation
Hours earlier than Trump’s words, Powell had delivered a cautionary speech outlining the pitfalls that the current path of economic growth might enthrone.
According to him, increased tariffs, particularly those imposed on China, Mexico, and the EU imports, not only lead to inflation but hinder economic growth.
“The Federal Reserve might find itself in an extremely painful trade-off situation if tariff-induced inflationary pressure runs into an easing economy,” Powell said.
The basic problem Powell discussed is an age-old monetary policy puzzle: stagflation, where inflation rises even as growth slows.
It is especially vexing for central banks because interventions aimed at curbing inflation (e.g., raising interest rates) tend to slow growth—while interventions aimed at spurring growth (e.g., lowering interest rates) tend to fuel inflation.
Tariffs Are Back—And Bigger
Trump has imposed wide-ranging tariff increases in many sectors since returning to the White House:
- A 25% tariff on Chinese electronics and auto imports
- New tariffs on European medicines and steel
- Proposed tariffs on Mexican farm products
Trump claims the tariffs are to bolster American industry and job creation, but economists warn they will raise prices for consumers and discomfort global supply chains as inflation was finally stabilizing.
Markets Respond: Volatility and Political Instability
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The stock market responded with immediate volatility. The S&P 500 initially dropped 1.6% following the comments of Powell and Trump’s defensive tweet.
Two things spook investors especially:
1. Policy Mismatch
As the ECB lowers rates while the U.S. Fed holds firm, a growing interest rate gap could strengthen the dollar, hurt exports, and worsen economic imbalances.
2. Federal Reserve Independence
Trump’s public calls for the firing of Powell raised concerns of political interference with the traditionally independent central bank.
Bond markets also shifted, with the 10-year Treasury note yield rising to 4.62% as investors demanded greater returns in perceived inflation risk.
Can Trump Fire Powell?
Legally, the President cannot terminate the Federal Reserve Chair without just cause. Powell is scheduled to be in office through May of 2026, and has openly stated he plans to fulfill the term.
“The independence of the Federal Reserve is central to the stability and credibility of U.S. monetary policy,” Powell said in a March press conference.
Trump has a history of going after top central bank officials. During his initial term, he frequently sparred with Powell and the Fed’s interest rate decisions—though he later reappointed him to a second term beginning in 2022 under President Biden.
Should Trump dismiss Powell, it would likely ignite a constitutional and legal fight that would unnerve global markets and erode U.S. financial institutions’ reputations.
Jonathan Kanter Speaks Out on Behalf of the Fed
Jonathan Kanter, the antitrust chief of Biden, added by emphasizing the need for safeguarding central institutions from political interference.
“A financially secure future depends on trust in the rule of law and the independence of agencies like the Federal Reserve,” Kanter said in a CNBC interview.
He warned that any political action to remove Powell would damage not just markets, but the government’s institutional credibility.
ECB’s Rate Cuts Put Pressure
Meanwhile, the European Central Bank has embarked on a bold rate-cutting binge—cutting interest rates seven times in 2025 alone.
ECB President Christine Lagarde cited weakening European demand, decelerating inflation, and sluggish investment as reasons for the cuts.
This contrast in global money policy is subjecting the Fed to more stress. Others are saying the Fed should follow suit to avoid increasing rate differentials that will:
- Produce currency distortions
- Harm American exports
- Trigger capital flow volatility
Powell is being cautious, though, and said that inflation figures must show “clear and sustained progress” before cutting interest rates is considered.
What This Means for the Average American
For regular consumers, the Trump-Powell power struggle—and the broader macroeconomic trends—could have real-world impacts:
- Higher prices due to import tariffs on everyday items
- Uncertainty in mortgage and car loan rates
- Slower wage growth if firms delay investment
- Market volatility that will impact retirement accounts and savings
With inflation once more hovering at 3.9% and growth estimates being revised down, Americans may be in the midst of a standoff between political ideals and economic prudence.
Conclusion: A Potentially Hazardous Confrontation
Trump’s insistence on the removal of Powell is an expression of growing tensions between the executive branch and the Federal Reserve.
With tariffs beginning to bite and inflationary pressures rising again, the central bank will need to walk a thin needle without becoming an instrument of politics.
Powell, backed by institutional independence and wary of repeating the mistakes of the 1970s stagflation years, seems determined to stay the course.
Trump, however, appears to be willing to challenge that independence in the name of short-run economic stimulus and political victory.
The outcome of this struggle may shape not only the destiny of U.S. monetary policy—but also the integrity of one of the globe’s most powerful financial institutions.
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