Trump's Tariffs Spark 10-20% Crypto Drop, Powell's Removal Sought

Federal Reserve Chair Jerome Powell has found himself in a challenging position due to the economic policies of Donald Trump. The conflict between Powell and Trump has been ongoing, with Trump repeatedly urging Powell to cut interest rates to stimulate the economy. However, Powell has maintained a stance focused on controlling inflation, which has led to Trump's decision to seek Powell's removal through the Supreme Court.

The root of the conflict lies in Trump's tariff policies, which have had a significant impact on global markets. On April 2, 2025, Trump implemented tariffs on trading with numerous countries, leading to substantial declines in both stock and crypto markets. The crypto market experienced a 10 to 20 percent drop, while many stock markets saw their worst declines in decades. The fear and greed index reached an "extreme fear" level, highlighting the economic uncertainty caused by these policies.

Trump's tariffs, particularly those targeting China, have been described as a "shock" to the economy. Despite initial rumors of a 90-day pause on tariffs, the White House confirmed that harsher tariffs were implemented on China, raising them to 145 percent. This move has raised questions about the effectiveness of Trump's economic policies and their impact on American businesses.

On April 10, 2025, it was revealed that the inflation rate in the U.S. had dropped. Trump reacted positively to this news but continued to push for an interest rate cut to stabilize the market. Powell, however, has been reluctant to cut rates, citing the need to assess the economic impact of Trump's tariff policies. This stance has led to Trump's decision to seek Powell's removal through the Supreme Court, potentially dismantling a 1935 precedent that protects Powell's position.

Trump's move to oust Powell could be seen as an attempt to consolidate power and reduce decentralization within the government. However, investors hoping for rate cuts may view this as a positive development. The potential removal of Powell could pave the way for a more pro-crypto successor, such as Kevin Warsh, who might be more willing to cut rates and implement policies favorable to the crypto market.

Powell's stance on interest rates has had a mixed impact on the crypto market. In December 2024, Powell's decision to cut interest rates reversed a crypto bull run, but on other occasions, he has shown support for the crypto industry. Trump's overall crypto-friendly policies have been a bullish factor for Bitcoin, but his attempt to remove Powell solely to cut interest rates may not be beneficial in the long term. Powell's term is set to end in May 2026, and the outcome of this conflict remains uncertain.