In a move that has calmed markets, U.S. President Donald Trump confirmed on Tuesday that he would not be firing Federal Reserve Chairman Jerome Powell, despite previous remarks that had suggested otherwise. Trump’s comments come after a period of heightened tension between the White House and the central bank, particularly over Powell’s warnings that the president’s trade policies could reignite inflation.
“I have no intention of firing him,” Trump said during a press briefing. “I would like to see him be a little more active in terms of his idea to lower interest rates—it’s a perfect time to lower interest rates. If he doesn’t, is it the end? No,” the president added.
Trump’s reassurance followed growing concerns that Powell, who had been publicly critical of Trump’s aggressive tariff strategy, might be dismissed. The president had previously expressed dissatisfaction with Powell’s stance on the economic consequences of the administration’s tariffs on China, which have disrupted global markets.
Since Trump’s return to the Oval Office in January, the U.S. has imposed significant tariffs on Chinese goods, including a 145% tariff on numerous products from China. These tariffs were initially aimed at addressing China’s role in the fentanyl supply chain and other practices deemed unfair by Washington.
In response, China has retaliated with its own tariffs, including a 125% levy on U.S. exports. Despite this, Trump acknowledged on Tuesday that the 145% tariff rate was too high and would be reduced. “It will come down substantially,” he said, adding that the rate would not return to zero but would be significantly lower. Trump emphasized that a trade deal would be necessary, as China would not be able to conduct business with the U.S. under the current conditions.
These comments were made shortly after U.S. Treasury Secretary Scott Bessent spoke at a private JPMorgan Chase event, where he stated that the tariffs had effectively created a reciprocal trade embargo. Bessent, however, suggested that a de-escalation of the situation was likely, bringing optimism to financial markets. Wall Street saw a positive response to these remarks, with major indexes posting gains, while Asian markets also rallied.
While the U.S. Treasury chief acknowledged the ongoing trade challenges, he emphasized that the goal was not to decouple from China, noting the sharp decline in container bookings between the two countries as trade tensions mounted.
In a related statement, White House Press Secretary Karoline Leavitt expressed confidence in the administration’s handling of trade negotiations. “We’re doing very well in respect to a potential trade deal with China,” she said, adding that the U.S. and China were moving in a positive direction toward a deal, despite China’s lack of confirmation on the matter.
As the global finance community gathers in Washington for the International Monetary Fund and World Bank’s Spring Meetings, the focus remains on the U.S.-China trade talks and the future of tariffs. Other countries, including Japan, are also seeking to engage with the U.S. on the issue, with reports indicating potential concessions from Tokyo to alleviate some of the trade pressure.
In China, Foreign Minister Wang Yi called on the UK and European Union to collaborate with Beijing on safeguarding international trade. Meanwhile, Japan’s Sumitomo Rubber announced a significant price increase for tires sold in the U.S. and Canada, citing the escalating trade tensions.
As trade talks continue to unfold, global markets are closely monitoring any developments that could signal a resolution to the ongoing trade war.