A livid President Trump tore into Federal Reserve Chairman Jerome Powell on Friday as a “bigger enemy” than China — sending markets plunging as fears of a recession fueled by the spiraling trade war.
After Powell pointedly warned in a speech that he could not undo the damage from Trump’s signature tariffs, the president tore into the banker for failing to stop a looming economic downturn that could doom his 2020 reelection bid.
“As usual, the Fed did THING,” Trump wrote on Twitter.
....My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?
My only question is, who is our bigger enemy, Jay Powell or (Chinese premier Xi Jinping)?"
The extraordinary broadside aimed at Powell — and onetime buddy Xi — came just hours after China announced new tit-for-tat tariffs on American goods, a move that could herald a dangerous new stage of the still-growing trade feud.
Trump had up to now lavished praise on Xi, even as he vows to crush China in a trade war that he claims is great for America.
Apparently unnerved by signs of a wobbly economy, Trump changed his tune on Friday, lashing out at Xi in a tweetstorm that blamed him for stealing billions in American intellectual property and flooding the U.S. with the drug Fentanyl.
Trump may have hoped that Powell would signal a major new push to juice the economy to compensate for the trade war. Instead, the powerful central bank boss sounded a cautious note, saying that consumer demand remains strong and unemployment is low.
Powell’s speech poured cold water on hopes the Fed will quickly drop interest rates. Trump has openly demanded a massive cut of a full 1%.
The stock market, which famously hates unpredictability, sunk on the triple dose of bad news: China’s trade retaliation, Powell’s dovish speech and Trump’s angry response to both of them. The Dow was down nearly 1. 5% by mid-morning.
Political analysts believe Trump is concerned that a softening economy or a full-blown recession could cripple his reelection prospects.
Although Trump is historically unpopular, most incumbent presidents have won reelection in times of prosperity. A recession could mean all bets are off for him.