Trump finds new scapegoat for US financial crisis
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Donald Trump’s online attacks on Jerome Powell, chair of the Federal Reserve, has been blamed for yet another drop on the US stock market, which is now 12% down since the start of 2025.
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Read time: 6 mins
In brief…
- Trump has called Powell a “major loser” for not lowering US interest rates, despite fears of a looming recession, and has hinted he might remove him from his role if he doesn’t act as the president demands.
- Financial expert Huw van Steenis tells The News Agents that Trump’s actions have left those working in the industry confused, and says the US is acting like an “emerging market”.
- The News Agents says Donald Trump is desperate to place the blame on someone for the state of the US economy, and has chosen Powell – but may have made the wrong choice.
What’s the story?
Considering the state of the US stock market since Donald Trump introduced his tariffs, it was a questionable move to call the Federal Reserve chair a "major loser" in the midst of a growing financial crisis.
The value of US stocks plummeted when the president introduced sweeping tariffs on global trading partners, with experts continuing to warn that his plan was likely to increase prices for Americans, rather than bring costs down as promised.
Trump lashed out at Jerome Powell, head of the FED (the central Bank of America) in a social media post, attacking him for not lowering interest rates, amid a flurry of lies about the US economy.
He claimed there was "virtually no inflation" in the US and that energy costs and food prices were down, when the opposite is currently true across the US.
It triggered a 2.4% drop on the S&P 500, contributing to an overall decline of 12% since the start of 2025.
In an interview about the situation, Trump suggested he was considering removing Powell from his job – which is not legal under US law.
"If I ask him to, he'll be out of there," Trump told a reporter.
"I'm not happy with him. If I want him out, he'll be out of there real fast. Believe me."
Donald Trump finds new person to blame for US economy crash
Why is Trump coming for Jerome Powell?
Powell was appointed to his role in the FED by Trump during his first term, but now in round two, he’s become the president’s top target.
“During the COVID years it was Anthony Fauci, the man at the centre of America's health policy – he became the devil incarnate,” says Emily Maitlis.
“It’s now Jerome Powell's turn.
“I think Trump’s idea is that if he exerts enough pressure on Jerome Powell, Powell will turn around and say: ‘Well, if I want to keep my job, I'll cut interest rates.’ Of course, he can't do that because that undermines the whole point of the FED. Its mandate is to preserve stability.”
She adds that in Trump’s playbook when things go wrong, the first thing you need is a face or personality to blame.
“Nothing can ever be Donald Trump's fault,” says Jon Sopel.
“So when you've got market instability as a result of his tariffs policy, he needs someone to blame.”
He says there is a stark contrast to Trump’s behaviour during his first term, when he would “do a victory dance” when the stock markets hit record highs during his previous administration.
“He loved being able to celebrate and venerate the market and how well it had done – and it was all down to him.
“And here we are in the situation where the S&P 500 seems to be on a permanent downward slide.”
But despite all this, there are millions of people who still follow what Trump says, Jon adds, and that his every move is “the art of the deal” – no matter the consequences.
“There are still a lot of people who believe it's the genius of Donald Trump that is leading this, and it's all going to come good in the end,” he says.
“But my word, you are on a downward slide at the moment, and every step that Donald Trump seems to be taking is making it worse.”
What do the experts say?
Huw van Steenis is a former senior adviser for Mark Carney when he was the governor of the Bank of England, British financier and vice chair of a management consultancy.
He compares Trump's actions in 2025 to those of Richard Nixon in 1971, when he attempted to "jawbone" the central bank governor of the time to cut rates to offset the damage caused by his own tariffs.
This resulted in "huge economic chaos" throughout the seventies, he adds, but proved popular with US voters, and helped secure Nixon a second term in office.
But Trump's end goal with his economic activity remains a mystery to experts such as van Steenis.
I think all of us in markets are trying to work through the rationale," he tells The News Agents.
"Many folk I meet, such as investors, would be supportive of some of his talking points about trying to reassure some of the jobs.
"The challenge is the way he's going about it, which is causing some real economic chaos, which will ripple through the ages."
He says Trump's behaviour is the sort of thing experts would "normally expect to see in emerging markets" playing out in the US, supposedly the world’s biggest economy.
What’s The News Agents’ take?
Trump wants Powell to take the blame for America's current financial crisis – but The News Agents say that simply isn't a feasible option for the president, no matter what course of action he takes.
"If Powell stays in the job, people are going to think he's been lent on, because he's been brow beaten by Trump, in which case that is going to lead to a diminution in trust," says Jon.
"If Donald Trump does fire him, then are people going to turn around and say the person who takes his place is a lackey.
"Therefore the Federal Reserve will not be independent anymore. It's not going to be data driven, it's going to be Trump driven."
Emily describes the current financial plunge as the result of “the politicisation of another American institution that Donald Trump should not be going anywhere near.”
The International Monetary Fund (IMF), which had previously predicted 1% growth in 2025 for US markets, has now wiped that off the books due to Trump’s latest interventions – and also downgraded forecasts for all other G7 countries as well.
The one thing that's gone up amid Trump's interference? The price of gold – although that's nothing to celebrate.
It has recently hit a record high of $3,500 (£2,613) per ounce.
"Investors have been running away from traditional investments, putting their money in gold – the traditional asset of flight," says Emily.
"Essentially, it's what you go to if you don't trust national governments, central governments - and this is all because Donald Trump has created the chaos."
Listen to the latest episode of The News Agents.
