Trump vs Powell: Why the US President wants the Fed Chair out, and whether he can fire him

US President Donald Trump demands termination of James Powell and immediate rate cuts

US Federal Reserve Chairman Jerome Powell, originally appointed by Donald Trump during his first term, is now facing fierce criticism from the president, who’s calling for his "termination" and labeling him "too late and wrong."

What triggered this dramatic tussle between the two, and does Trump actually have the power to remove the Fed chair over policy disagreements?

With Trump’s reciprocal tariffs rattling the globe, he and Powell find themselves on opposite sides. While he has granted a 90-day pause on the tariffs for all except China, Federal Reserve Chairman Jerome Powell recently warned that these trade measures could seriously harm the U.S. economy by fueling inflation and slowing growth.

In response, Trump lashed out—calling for Powell’s 'termination.'

In 2017, Trump appointed as the Jerome Powell, an investment banker as the 16th chairman of Federal Reserve, former President Joe Biden reappointed him in 2021. Since the appointment he is facing backlash from the Trump, he called for his firing at multiple occasions.

In 2018, Trump wanted to replace Powell over raised interest rates and later called him 'enemy' over interest rates disagreement. Trump has also challenged the Fed's independence, arguing that the president should at least have a say on interest rate policies.

Powell's term expires in 2026 which will give Trump a chance to appoint a new Fed chief. Let's take a look at how the Fed's chief is appointed.

The Federal Reserve System, was created by Congress in 1913, has 12 regional Federal Reserve banks dotted across the country; and the Federal Open Market Committee, including both Fed board members and regional bank heads.

The Fed board comprises of a total of seven members, which includes an overall chair who has a term of four years and can be reappointed, two vice chairs - one for monetary policy and one for bank oversight - and four other governors. All are appointed by the US President subject to confirmation by the Senate.

Federal Reserve governors are selected by the president and must be confirmed by the Senate, serving terms of up to 14 years. The chair and vice chair are appointed to four-year terms that align with their time as governors. If they are not reappointed to their leadership roles, they generally do not continue serving as governors.

If President wants to remove the Federal Reserve Board member, they need to have a valid cause or “for cause.” For cause means something like misconduct or neglect of duty, not just policy disagreements.

The law is designed in a way to protect the Fed’s independence, to prevent politicians from manipulating interest rates for their political gain.

This is not the first instance that President and Fed chief are having opinion clashes during Richard Nixon's tenure Arthur Burns had different opinion. Nixon wanted Burns to lower interest rates, but Burns resisted. However, Nixon couldn’t fire him because he didn’t have legal grounds.

Whereas President can decide not to reappoint a Chair but cannot remove them without a valid cause.

The clash between Trump and Powell highlights the enduring tension between political agendas and the Federal Reserve's independent mandate. While a president can criticize or decline to reappoint a Fed chair, they cannot legally remove one over policy disputes.