Last Sunday (8th) Eastern Time, US President elect Donald Trump stated that he has no plans to replace Federal Reserve Chairman Jerome Powell after officially taking office in the White House.
He said in his latest interview, "I didn't see this plan." This is Trump's first television interview since winning the election. Powell's term as Federal Reserve Chair will expire in May 2026.
I think if I tell him, he will (resign), but if I ask him to (resign), he may not, "he added.
However, Powell made it clear in the days following the election that he was prepared to defend the independence of the Federal Reserve from political pressure and insisted that the incoming president had no power to dismiss him or other senior leaders of the Federal Reserve. He told reporters last month that if Trump asked him to resign, he would not resign early.
As a background, the two have had multiple conflicts within "Trump 1.0", and Trump has publicly criticized the Federal Reserve under Powell's leadership, complaining that it keeps interest rates too high and even threatening to dismiss him. Until Biden's victory in 2022, Powell was reappointed as the Chairman of the Federal Reserve for a four-year term.
During the previous election campaign, Trump stated that he should have a "say" in monetary policy. He said at the time, 'I believe that although I should not be allowed to order (what the Federal Reserve does), I believe I have the right to comment on whether interest rates should rise or fall.' This sparked widespread concerns in the market about political interference in the Federal Reserve's policy-making.
Wall Street analysts believe that political conflicts may be inevitable in the next four years. The tax cuts and comprehensive tariffs proposed by Trump will cause high inflation in an economy that is operating at near full capacity. If inflation accelerates again, the Federal Reserve will need to maintain high interest rates.
Former Chief Economist of the International Monetary Fund, Olivier Blanchard, recently commented that the risk of conflict between the Trump administration and the Federal Reserve is very high, and if the Fed raises interest rates, it will hinder the Trump administration from delivering what it wants.
Tariff threat
In this interview, Trump once again threatened to impose tariffs on US trading partners if necessary, specifically mentioning the trade balance between the US and Mexico and Canada, and attempting to imply that US trade with these two countries is equivalent to subsidizing their economies.
Why do we subsidize these countries? We are subsidizing Mexico, we are subsidizing Canada, and we are subsidizing many countries around the world, "he said.
When asked if economists generally believe that tariffs will raise prices for consumers and if he can guarantee that American households won't pay more, Trump acknowledged the uncertainty and said, "I can't guarantee anything. I can't guarantee tomorrow
Other policies
Immigration is one of the core issues of Trump's campaign, with Trump once again emphasizing plans to deport millions of illegal immigrants and attempting to revoke birthright citizenship.
The 14th Amendment to the United States Constitution stipulates that individuals born within the United States are eligible for U.S. citizenship. Trump promised that if possible, he would abolish it through administrative action, and said that he had tried before, but later "had to solve the COVID-19 epidemic first".
We need to end this practice because it's too absurd, "he said.
When asked about families with mixed immigration status (some members are legally residing while others are illegal), Trump said, "I don't want to break up families, so the only way not to break them up is to keep them together, you have to send them all back." He emphasized that the cost and logistical complexity of deporting millions of people did not deter him.
In terms of foreign policy, Trump has stated that he is actively working to end the war and that Ukraine "may" not receive as much military aid from the United States when he takes office again. He also stated that he would not promise to keep the United States in NATO unless' they can afford the bill '.
Finally, Trump also stated that he will strive to extend the tax cuts he passed during his first term, will not seek restrictions on abortion drugs, and will pardon those convicted of the January 6, 2021 Capitol Hill riots.