Trump Petitions Supreme Court to Remove Powell Amid Tariff Market Turmoil

President Donald Trump has petitioned the Supreme Court to authorize the removal of high-level officials from independent agencies, a move that could potentially target Federal Reserve Chair Jerome Powell. This development comes amid growing tensions between Trump and Powell over monetary policy, particularly in the wake of recent tariff policies that have caused significant market disruption.

The conflict between Trump and Powell has been brewing for some time. Powell has maintained high interest rates to control inflation, a stance that has frustrated Trump, who has been pushing for rate cuts to stabilize markets following the implementation of new tariffs. On April 2, 2025, Trump's administration implemented widespread tariffs on dozens of countries, an event dubbed "Liberation Day." This policy led to severe market turmoil, with crypto markets dropping 10-20% on April 7 and stock markets experiencing some of their worst declines in decades.

American markets fared relatively better due to rumors of a possible 90-day pause on tariffs. The White House initially denied these rumors but later confirmed a pause for most countries except China, which faced increased tariffs of 145%. The market response was severe, with the fear and greed index reaching "extreme fear" following Liberation Day. Small businesses in the US appeared especially vulnerable to the economic fallout.

Trump has shown no regret about the market downturn, suggesting that the potential "pain" from tariffs is worth it for future prosperity. Some analysts believe Trump intentionally created market fear to strengthen America’s negotiating position, while others suggest he yielded to pressure from wealthy investors. Many remain puzzled about how restricting American companies with Chinese manufacturing operations will help the US economy.

On April 10, US inflation rates showed a decline. While Trump welcomed this news, he still pushed for interest rate cuts to stabilize markets. This decision falls under the authority of the Federal Reserve, an independent agency chaired by Jerome Powell, who has been reluctant to cut rates. Powell faces an impossible situation: cutting rates risks unleashing inflation, while maintaining current rates might ignore economic slowdown and labor market deterioration, which could eventually cause inflation anyway.

Despite these pressures, Powell sees no justification for rate cuts and remains focused on controlling inflation and minimizing economic risks. On April 4, he stated that central banks should first evaluate the impacts of Trump’s rapid trade policy changes before making monetary policy adjustments. Trump appears dissatisfied with this resistance and has petitioned the Supreme Court to authorize firing high-level officials from two independent agencies, a move that could target Powell.

If the Supreme Court overturns the 1935 precedent established in Humphrey’s Executor vs. the United States, Powell could lose his protection from executive removal. Trump might argue this precedent conflicts with Article II of the Constitution, providing legal grounds for termination. Critics view this approach as an attempt by Trump to consolidate power and reduce government decentralization. However, investors hoping for rate cuts might welcome such a move.

Powell’s December 2024 announcement of a low interest rate cut reversed a crypto bull run that was underway at that time. He hasn’t been viewed as particularly crypto-friendly, though he has shown support on some occasions, such as criticizing banks for refusing service to crypto clients. If Trump succeeds in removing Powell, he might nominate Kevin Warsh, who is seen as more pro-crypto, or someone more willing to cut rates on demand. Lower interest rates could trigger inflation, which typically benefits Bitcoin in the short term.

Trump’s overall crypto-friendly policies are already considered a positive factor for Bitcoin. However, the attempt to use the Supreme Court to remove Powell, who many believe has performed well in his role, simply to force interest rate cuts could have unintended consequences for markets and monetary policy independence. The outcome of this legal battle will have significant implications for the future of monetary policy and the independence of the Federal Reserve.