Trump: 'I will not fire Powell from the Fed'. And tariffs with China will come down
The President shuffles the cards: he withdraws the assault on the Central Bank and signals openings on trade. Tariffs in Beijing will be 'significantly' reduced. Dollar and stock futures rally.
2' min read
2' min read
Donald Trump will not fire Federal Reserve chairman Jerome Powell. "I have no intention of it," he rather told reporters from the White House. A dramatic turnaround, after he had instead been sowing panic among investors for days by attacking Powell as a "loser" whose exit "couldn't happen fast enough". And after filtering through his close aides that he was studying options for removing him by force.
This was not the President's only sharp correction. On the trade wars he surprised by stating that the tariffs against China that he himself raised to 145% are now 'very high'. And he added a promise that they 'will not be that high', that they 'will come down significantly'. Although 'they will not be at zero, as they were previously'. China, even before Trump's recent moves, was in fact already subject to a series of tariffs triggered under his first administration and continued and sometimes reinforced by Joe Biden.
On the financial markets, the pair of sudden developments generated new optimism. The futures on Wall Street stock indices gained around 2% and the dollar, which had been under pressure for days and at multi-year lows, regained altitude.
On Powell, the President adopted decidedly more moderate language free of insults and exclamation points. "I wish he would be a little more active about his idea of lowering interest rates," he said, "But no, I'm not going to fire him. Again: 'This is the perfect time to cut rates. If he doesn't, is it the end? No, it is not'. Forget his threats of a few days ago when he claimed, against the advice of most legal experts, that he had the power to oust the Fed chairman and effectively erase his independence: 'If I want to, I will oust him very quickly, believe me.
The stance on trade for its part reinforced what Treasury Secretary Scott Bessent had said earlier in the day. Speaking privately to bankers and investors at a JP Morgan event he had argued that the current level of confrontation with Beijing is 'unsustainable' and predicted a de-escalation of tensions and the possibility of a deal. The Trump administration, he had pointed out after weeks marked on the contrary by cold war tones, is not aiming at an economic 'decoupling' from China. Those statements had already pushed Wall Street to close Tuesday's session up about 2.5 per cent.
