Fed Chairman Labels Trade War As Source Of Concern, Trump Labels Him An Enemy

President Trump's hand-picked Federal Reserve Chairman is stating the blindingly obvious about the ongoing trade war, so of course the President labeled him an enemy.

Speaking at an annual conference of top economists, bankers, corporate leaders and others in Jackson Hole, Wyoming, Federal Reserve Board Chairman labeled the President’s trade war as a source of concern for the economy, which led to the President lashing out against him on Twitter:

Jerome H. Powell, the Federal Reserve chair, kept future interest rate cuts squarely on the table on Friday but suggested that the central bank was limited in its ability to counteract President Trump’s trade policies, which are stoking uncertainty and posing risks to the economic outlook.

Mr. Powell’s remarks drew a swift and angry reaction from Mr. Trump, who equated the Fed leader with the president’s adversary in the trade war, President Xi Jinping of China.

“My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?,” Mr. Trump wrote in one of a series of Twitter posts.

The president’s harsh response to Mr. Powell, a frequent target of Mr. Trump’s ire, came after the Fed chair emphasized the limits of the central bank’s ability to overcome economic uncertainty stemming from the president’s trade war.

“While monetary policy is a powerful tool that works to support consumer spending, business investment, and public confidence, it cannot provide a settled rule book for international trade,” said Mr. Powell, who spoke in Jackson, Wyo., at the Federal Reserve Bank of Kansas City’s annual symposium.

“Our challenge now is to do what monetary policy can do to sustain the expansion” to achieve the Fed’s goals of low unemployment and stable inflation, he had said earlier in the speech.

Mr. Powell’s remarks indicated that the Fed, which cut interest rates in July for the first time in a decade, remained willing to cut again in order to keep the economy growing.

But his reluctance to clarify the timing or size of any such move highlighted the central bank’s predicament: Unemployment is low and consumer spending is strong, but Mr. Trump’s trade conflict is fueling uncertainty, weighing on manufacturing and roiling markets. And the Fed is limited in its ability to resolve unpredictability.

“Trade policy uncertainty seems to be playing a role in the global slowdown and in weak manufacturing and capital spending in the United States,” Mr. Powell said, adding that there were “no recent precedents to guide any policy response to the current situation.”

His comments followed Beijing’s announcement on Friday that China would retaliate against the Trump administration’s next round of tariffs by increasing taxes on $75 billion of American imports, including agricultural products, crude oil and cars. Both countries plan to increase their levies in September and December, which could exacerbate the economic harm from a trade war that is already causing financial pain across the globe.

Mr. Powell noted that the period since the Fed’s last meeting, on July 31, “have been eventful.” The day after that meeting, Mr. Trump announced that the United States would tax another $300 billion in Chinese products. Further evidence a global slowdown has also emerged since then, and financial markets have reacted to the “complex, turbulent picture,” Mr. Powell noted.

He said that policymakers were “carefully watching developments” as they assessed the implications for the economic outlook and monetary policy, and maintained an earlier pledge to “act as appropriate to sustain the expansion.”

Against that backdrop, some members of the policy-setting Federal Open Market Committee support cutting rates to shore up economic growth, while others want to wait to monitor how the trade dispute plays out.

“Risk management enters our decision making because of both the uncertainty about the effects of recent developments and the uncertainty we face regarding structural aspects of the economy,” Mr. Powell said.

Here are the President’s tweets, about which I’ll have more to say below:

Powell’s statement doesn’t really provide any clear indication of where the Federal Reserve may be headed on the issue of future interest rate cuts, but in that respect, he is acting consistently with the manner in which his predecessors have in the past. As a general rule, the person serving as Federal Reserve Chairman has avoided direct commentary on Fed policy outside of the official communique that is released after each of the board’s meetings. The main reason for that is the desire to limit the impact that their words, rather than their actual policies, have on market activity and on the economy. Even when speaking officially, the men and women who have held the position have been known for speaking as opaquely as possible for the same reason that they don’t discuss the direction of policy in public.

Despite this, there’s no need to really guess what Powell was talking about here. Clearly, he is clearly making it known that the Federal Reserve has concluded, as have economists and economic analysts around the world that the trade war, and most especially the trade war currently going on between the United States and China, is having a negative impact on economic growth in China, around the world, and in the United States. Given that it is obvious to anyone who understands economics and how to read economic statistics that this is the case, it’s equally obvious that the Fed needs to keep an eye on the impact of the President’s ill-considered trade policies in setting interest rate policy. Indeed, it would be ignoring its statutory responsibilities if it failed to do so.

Notwithstanding all of that, President Trump is obviously not happy to hear the Federal Reserve Chairman that he appointed pointing out that his own policies are causing harm to the economy. As it is, there have been several reports this week quoting anonymous reports from inside the White House saying that that the President is becoming increasingly concerned that the state of the economy could have on his re-election chances next year. As a result, he has increasingly sought to “talk up” the economy in the apparent belief that he can talk the country out of a recession. He has also been lashing out at others as the source of any impending economic woes, with the Federal Reserve Board being the top candidate in that regard. Today, he capped that off with a Twitter post where he called the Chairman of the Federal Reserve Board an “enemy” because interest rates are not going down fast enough in Trump’s opinion.

The dangers in all of this are rather obvious. While the law does tend to shield the Federal Reserve Board in general and the Fed Chairman in particular from political influence, they are not entirely immune from those sources and, of course, they cannot respond to the President’s repeated attacks no matter how baseless they might be. Additionally, the law that governs the Fed is specifically designed to shield the Fed from political battles as much as possible. More likely than not Powell could not care less what Trump says about him on Twitter, but any time something like this happens it brings that entire balance into question. Let’s say the Fed does drop interest rates again at its next meeting, the President’s pressure means that people will likely ask if it is happening because it’s economically necessary or because the Fed is bowing to political pressure? The dangers of what is happening here cannot be overstated.

FILED UNDER: Economics and Business, International Trade, US Politics, , , , , , , , , , , , ,
Doug Mataconis
About Doug Mataconis
Doug Mataconis held a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020. He passed far too young in July 2021.


  1. michael reynolds says:

    We don’t need a rate cut because this is the best economy ever, so strong, no chance of recession! All this recession talk is just a conspiracy between Google, the Washington Post, and that baby-eating monster, Hillary.

    Besides, if the economy really were in trouble, Trump could just say #IHerebyOrder it to fix itself. Do you not understand that he is The Chosen One? Do you not understand that he is the King of Israel? The Second Coming of Christ? He speaketh in tongues! He maketh facts from whole cloth! Fall on your knees, oh hear the angel’s voices, oh T-r-u-u-ump divine, oh oh Trump is Christ reborn!

  2. Daryl and his brother Darryl says:

    @michael reynolds:
    It’s pretty sad when the only guy in your party talking any sense is the Mooch.

    We are now living in an American Nightmare scenario where we elected a MAD NIGHT KING. The last two weeks have been full blown TRUMPNOBYL and it will continue to get worse. Please call your public servants and ask them to act. .

    Perhaps it is wishful thinking…but maybe…just maybe…the sand is going to start shifting under Trump’s feet after today.
    For the life of me…given the chosen ones behavior…I don’t see how Pelosi continues to reject calls for Impeachment.

  3. Lounsbury says:

    Interesting he hasn’t attacked my old acquaintance Esther George yet. On the other hand maybe she hasn’t figured on Fox in the AM shows?

  4. Kathy says:

    My relevant question is: Can Dennison fire Powell?

  5. Teve says:

    I overheard a comedian from the other room the other day so I don’t know who it was, but they said “remember Dan Quayle? He had his entire presidential aspirations destroyed because he accidentally misspelled the word ‘potato’. Donald Trump can say on Tuesday something that would get ANYBODY fired from ANYTHING and we’re just like ‘whatever'”

  6. Hal_10000 says:

    It just keeps getting worse. If we hit a recession, Trump will be in total denial/blame mode. We think we’ve seen him insane before. He’ll be certifiable by election time.

  7. CSK says:

    @Kathy: Powell says no. It’s never happened before.

  8. David S. says:

    @Teve: Indeed. For some reason, most people who oppose Trump seem to think that posting useless comments on the internet is some kind of resistance, rather than actually actively working to remove the Republicans keeping him in power.

  9. Daryl and his brother Darryl says:


    He’ll be certifiable by election time.

    Do you think even the most feckless Republican can stand by and watch this Trumpnobyl for 15 more months?
    The Dow, right now, is down 700 points.

  10. michael reynolds says:

    I’m not sure I agree with the ‘cray cray’ diagnosis.

    When Hitler was in the bunker ordering non-existent armies to take up positions long-since lost, was he crazy? Or was it just the inevitable collapse of a terrified loser?

    Nothing Trump has done has surprised me, he’s behaving as he always has. Call him a psychopath or malignant narcissist – pre-existing personality disorders but not insanity – he’s behaving very much in keeping with his pattern. I think we may just have a psychopath who never had the mental capacity to deal with the job, flailing (as he does), blaming everyone else (as he does), incapable of honest self-examination (as ever), unconcerned with logic or consistency (as per), lying constantly (10,000 to date) and deeply, deeply afraid.

    Fear is the mind-killer, the little death, etc… Trump knows he’s a criminal, he doesn’t think he’s done wrong but that’s because he has no moral structure other than narcissism. But he knows he’s in trouble with the law. He knows he’s likely to be exposed as a fraud, he knows his brand is shit, he knows he can never use the name Trump on any new project outside of a few corrupt autocracies. If he is not re-elected he’s going to prison. He’s screwed six different ways, and any good psychopath is tuned to threats.

    #IHerebyOrder Denmark to sell me #Greenland!

    #IHerebyOrder the Wehrmacht to repel the Red Army!

    #IHerebyOrder the economy to turn around!

    #IHerebyOrder the Luftwaffe to fire missiles at New York!

    Stupid + cocky + needy + the world’s most challenging job + fear and more fear = Trump today. He’ll rage at anyone or anything that threatens to send him to prison. He’s in a trap of his own making and he doesn’t have the skill to extricate himself. So he fantasizes about being the chosen one, a self-soothing daydream where he’s not wrong, everyone else is wrong, including the people he hired to tell him he’s right. Magical thinking.

  11. CSK says:

    @michael reynolds: The point is that Trump’s public utterances and Twitter feed will have gone way beyond the current gibber, so for all practical purposes he’ll be acting and sounding like a loon.

  12. Kathy says:

    Lucky for the US economy, a big dose of political and economic policy uncertainty is just the thing to make things all better. And if that fails to work, I’m sure El Cheeto Loco is more than ready to unleash full-blown chaos. That’ll show them.

  13. PJ says:

    Today’s German word: Dolchstoßlegende.

    The stab-in-the-back myth (German: Dolchstoßlegende, pronounced [ˈdɔlçʃtoːsleˌɡɛndə], literally “dagger stab myth”) was the notion, widely believed and promulgated in right-wing circles in Germany after 1918, that the German Army did not lose World War I on the battlefield but was instead betrayed by the civilians on the home front, especially the republicans who overthrew the Hohenzollern monarchy in the German Revolution of 1918–19. Advocates denounced the German government leaders who signed the Armistice on November 11, 1918, as the “November Criminals” (German: November­verbrecher).

    Nothing is Trump’s fault, it’s the fault of all the people trying to undermine his glorious plan.

    There’s a list, and now Jerome H. Powell is on it.

    Trump really wanted to pick Tiffany, but other people, also on the list, got him to pick Powell instead.

  14. Kathy says:


    In the interest of accuracy, the bulk of German forces were in France and Belgium by the Armistice, and they had already concluded the war with Russia.

    But the German navy was close to home, except for some submarines out in the Atlantic, and their coasts were very effectively blockaded by the Royal Navy and others (don’t ever pick a fight with the RN). Starvation was imminent back home. Germany had tried a final big push int he western front, and couldn’t pull it off. On top of all this, fresh American troops and materiel just kept coming and coming.

    Germany had lost. The question was how many more people, on all sides, would die next, including how many German civilians at home.

    Not to mention unforced errors like the Zimmerman Note(*) which pretty much left Wilson little choice but to get involved in WWI.

    (*) The infamous Note was a proposal to the government of Mexico, such as it was (there was a revolution/civil war in progress), to invade the US in order to retake Texas, New Mexico, Arizona, etc., for which endeavor Germany would provide support.

    It’s positively Trumpian. Note Germany was blockaded by the British and their allies. How were they going to support Mexico? Cheering them on by telegram (routed through the US)?

  15. Teve says:
  16. Tyrell says:

    I will refrain from making my commentaries and observations about the Federal Reserve Bank. This brush up seems to be more about Trump and his running battle. Other presidents have had some problems too, usually about the interest rates (Arthur Burns). And trillions of dollars unaccounted for (Bernanke).
    If anyone would like some resources for information on how the Federal Reserve works, I will be glad to list some.
    Right now I am studying the decisions and tactics of General Joseph Hooker at the Battle of Chancellorsville.
    “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” (Henry Ford)

  17. michael reynolds says:

    The unsurprising but lovely thing is that after Trump said #IHerebyOrder, not a single corporation did anything but laugh at him. Because he’s a stable genius, dontcha know? A great businessman!

    Trump backed off his Christmas tariffs and the Chinese pantsed him publicly by slapping their own tariffs on. Have we ever had a president laughed at by everyone from foreign heads of state to corporate CEO’s at the same time?

    #IHerebyOrder Donald Trump to lick my big toe. And that order is 100% as likely to be obeyed as Trump’s ‘order.’ Ladies and gentlemen, the President of the United States.

    We’ll be moving very soon into the ‘you never gave our beautiful orange God a chance, it’s all the fault of Democrats, waaaaaah,’ stage. A few of the smarter ones will be trying out, ‘who coulda knowed he was a moron?’ .

    Poor, poor Trumpaloons. Remember three years ago? Oh, they were on top, ready to overawe the world. Trumpet fanfare! Da da da DAH! Then followed three years of deepening defensiveness. And now, they and their cult leader are objects of derision. And the Trumpaloons hide. It’s not that they’re on vacation, @Paul and @Guarneri and @VariousFuknuts are reading this, they just don’t have the guts to speak up and explain how it is they came to be worshipping the weakest man ever to be president.

  18. Lounsbury says:

    @Tyrell: There are not trillions of USD unaccounted for with the US federal reserve, that’s a sad pathetic, innumerate conspiracy theory, silly git.

  19. Kari Q says:

    @Daryl and his brother Darryl:

    Do you think even the most feckless Republican can stand by and watch this Trumpnobyl for 15 more months?

    Yes. Is that a serious question? Of course they will stand by and do nothing If they were going to turn on Trump for mental instability or manafest incompetence, they would have done so long ago. They haven’t and they won’t. They need his supporters to vote for them in the upcoming primaries, and there’s no sign that they will turn on their orange god.

  20. Lounsbury says:

    @Teve: A reasonable analysis, and as Barro writes by his very habits, Trump has rather incentivized China to take some short term pain on a good bet that Trump loses election due to economic downturn – one should add while at same time due to his bullying unilateralism, ends up incentizing other trade partners to collaborate more with China than US “And China has less reason to participate in a de-escalation than they did a year ago, since they can just ride out the next year and hope to be facing a new, less-hostile president. As Jonathan Chait notes, Xi Jinping doesn’t have to worry about reelection like Trump does.”

  21. grumpy realist says:

    Supposedly the only reason Trump is going to the G7 meeting is to haggle with Boris Johnson, who has just been told by Angela to get his Brexit homework in order before playing any more rounds of silly buggers with the EU.

    I suspect that we’ll see a lot of waffle and aspirational talk and no details at all over the “great, fantastic FTA” between the U.K. and the U.S. Brexit Part II. What’s going to be really amusing is when the aspirational waffle gets interpreted by Trump as YES the U.K. will sign over the NHS and control over any other FTAs with China and BoJo will come back to the U.K. with his equivalent of “peace in our time” until Trump’s assumptions get out at which point expect a total implosion in the British political system.

    The tendency of British politicians to remain carefully ambiguous (yes I’m looking at you Jeremy Corbyn) in order to swoop up as many inconsistent ideas as possible makes my teeth ache. Whatever comes down the line, Britain totally deserves it due to its incoherence and deliberate lack of planning.

  22. Scott O says:

    If anyone would like some resources for information on how the Federal Reserve works, I will be glad to list some.

    Let me guess, The Creature From Jekyll Island?

    Nice touch ending your comment with a quote from a Nazi sympathizer.

  23. Barry says:

    @Kathy: “Germany had tried a final big push int he western front, and couldn’t pull it off.”

    The Western Front had collapsed, the Allies were capturing troops and artillery like crazy. The reason that the German High Command wanted an armistice is that they were losing their Ar,y, their Navy was in revolt and they were starving.

  24. de stijl says:

    Who could have predicted that Trump was a “shoot the messenger” guy?

  25. EddieInCA says:

    Anyone who thinks that this is going to end well needs to head over to some center-right, “respectable” websites.

    National Review? Crickets about Trumps outrageous behavior.

    The Resurgent? Trump sucks, but the Democrats want to kill babies and suck overall.

    The Federalist? Trump is god, and the Democrats want to kill babies, take away your guns, and suck overall.

    The Bulwark? Trump sucks. Vote Democrat, even though they suck.

    The American Conservative/Rod Dreher? Trump is awful, terrible, horrendous, embarrassing, but Transgenders are coming after your kids and the Democrats won’t stop them, plus Democrats want to kill babies and won’t ever agree to laws that would allow outright discrimination against all LGBT people, so I’ll hold my nose and vote for Trump.

  26. de stijl says:


    Rod Dreher is facinating.

    He can find the oddest way to excuse horrible behavior that he finds distasteful, but inevitable.

    I’m an atheist, but way more moral and consistent.

  27. EddieInCA says:

    @de stijl:

    I’d have a lot more respect for the lot of them, including the David French’s of the world, if they would just come out and say, “We just want to be able to discriminate against anyone not a White, Christian Conservative. We want to be able to keep you from jobs. We want to be able to keep you from adopting. We want to be able to control your sex lives. We want, basically, to have you live by our rules, created by our God, as we choose to interpret them.”

    That, at least, would be honest.

    Like you, I’m an athiest, but much more moral than many of these cretins who proclaim their Christianity as proof of superiority.

  28. Moosebreath says:

    @de stijl:

    “He can find the oddest way to excuse horrible behavior that he finds distasteful, but inevitable.”

    Dreher also can find the oddest ways to say that practices which no one else ever heard of are proof of how widespread and powerful the forces opposing his brand of Christianity are.

  29. de stijl says:

    My quick take on Dreher:

    1. Guy needs an editor. He routinely posts 3000 words when 300 would suffice.

    2. Intensely parochial. If he’s read a book or a piece that gave him a mental stiffie recently – then *everything* has to be related to that and read via that framework. Dante.

    3. Super fixated on trans people.

    4. Thinks college kid protesters are the most powerful political bloc (when it suits his needs).

    He is bonkers, yet believes he is the sanest man on earth. Fascinating.

  30. Barry says:

    @de stijl: “He can find the oddest way to excuse horrible behavior that he finds distasteful, but inevitable.”

    A while back he reviewed the book ‘Camp of the Saints’ (tl;dr = ‘kill the darkies before they all kill and eat us’).
    He pointed out that it was 100% full of sh*t, but also pulled the old ‘it raises questions’ BS.

    In the end Rod’s blog posts will end up as the diary of a man excusing his conversion to Nazism.

  31. dazedandconfused says:


    It just keeps getting worse. If we hit a recession, Trump will be in total denial/blame mode. We think we’ve seen him insane before. He’ll be certifiable by election time.

    Hemingway labeled courage grace under pressure. I’ve never encountered a courageous malignant narcissist.

  32. Mister Bluster says:

    @EddieInCA:..I’d have a lot more respect for the lot of them, including the David French’s of the world, if they would just come out and say, “We just want to be able to discriminate against anyone not a White,..

    Meet Jean Cramer:
    Michigan council candidate wants to keep her town ‘as white as possible’

  33. Kari Q says:


    Actually, National Review has an editorial that criticizes the “enemies” tweet and then pivots to talking about how awful China is. It’s weak, but more than I expected.

    French has a post in The Corner that’s pretty critical of Trump.

  34. An Interested Party says:

    Can someone explain why anyone who isn’t a toady, sycophant, and/or grifter would ever work for this administration? I imagine that once this trash is gone, his vile taint will stain so many who are associated with him…

  35. Tyrell says:

    @Scott O: “Have you driven a Ford lately?”