What Does Trump Even Get if He Fires Jerome Powell?

The White House and the Federal Reserve, two pillars of American economic governance, stand as symbols of political and financial power. Yet in April 2025, with Donald Trump in his second term, the line between these institutions has never been blurrier. The question of whether Trump could—or would—fire Federal Reserve Chair Jerome Powell raises profound implications for markets, policy stability, and the legacy of central bank independence.

The Power to Fire—and the Risks

As president, Trump retains the constitutional authority to remove Fed Chairs, though doing so without cause would set a historic precedent. The Fed’s independence, enshrined in the 1977 Humphrey-Hawkins Act, is meant to shield it from political pressure. Yet Trump’s 2025 administration has already tested boundaries: tariffs imposed in April triggered a stock market crash, erasing $3 trillion in equity value in a week.

Why Would Trump Act?

The primary motivation for ousting Powell would likely hinge on economic metrics. Under Powell, the Fed has maintained an inflation-targeting framework, but Trump’s 2025 policies—such as 30% tariffs on China—have strained global supply chains. If unemployment rises or GDP stumbles, Trump might blame Powell’s “overly cautious” rate hikes.

Yet Powell’s tenure has coincided with record-low unemployment (3.4% in early 2025) and subdued inflation (2.8% in March . The Fed’s gradual rate hikes since 2022 have avoided a recession, unlike the abrupt policies of Trump’s 2025 tariffs, which already caused a 10% drop in manufacturing output.

Market Reactions: Chaos or Calculated?

Markets would likely react violently to a Powell firing. The Fed’s credibility as an independent body is its core asset. A politically motivated removal could lead to:
- Interest Rate Volatility: The 10-year Treasury yield spiked 50 bps in 2020 when Trump criticized the Fed; a repeat could exceed 5%.
- Dollar Depreciation: A loss of confidence in monetary policy might weaken the dollar, hurting U.S. exports.
- Equity Sell-Offs: The NASDAQ fell 12% in 2018 after Trump criticized the Fed; a 2025 repeat could be worse given tech’s reliance on steady rates.

The Political Payoff

For Trump, the benefit could be short-term political gain. Ousting Powell might galvanize his base, framing it as a “rejection of elites.” Yet the costs could outweigh gains:
- Judicial Pushback: Courts have already blocked Trump’s 2025 executive orders targeting law firms and media. A Fed removal could face similar legal challenges.
- Global Repercussions: Central banks worldwide watch the Fed; political interference might trigger a flight from U.S. assets.
- Economic Backlash: Businesses rely on stable monetary policy; sudden Fed changes could stall investment.

Conclusion: A Pyrrhic Victory?

Firing Powell would be a gamble. While Trump might score a temporary political win, the economic fallout could be severe. The Fed’s independence has been a bulwark against inflation and instability for decades. If Trump weakens that, the cost to markets—and his own legacy—could be monumental.

Data underscores the stakes: The S&P 500 lost 22% in 2022 during the Fed’s last aggressive rate-hike cycle. A politically driven Fed leadership change in 2025 might trigger a sharper decline. Investors should brace for turbulence—but also remember that central bank credibility, once lost, is hard to regain.

In the end, Trump’s calculus hinges on whether a fleeting political gain is worth risking the foundation of American economic stability. The markets, as always, will vote first—and loudly.