"Will meet Fed Chair Powell at the appropriate time"
Reveals plan after Davos virtual speech
Formalizes previously feared attempt to intervene in monetary policy
Criticizes EU Big Tech regulations as "a form of taxation"
U.S. President Donald Trump has publicly pressured the Federal Reserve (Fed) ahead of next week's benchmark interest rate decision to cut rates. Since his presidential campaign, Trump has criticized the Fed's high interest rate policy and mentioned the dismissal of Fed Chair Jerome Powell, formalizing his attempt to intervene in monetary policy. President Trump also condemned the European Union (EU) regulatory authorities' sanctions against Big Tech as "a form of taxation," marking his full-fledged entry as the 'fixer' of Silicon Valley in his second administration.
Trump: "Interest rates must be cut immediately... I will demand it from Powell"
On the 23rd (local time), during a virtual speech at the World Economic Forum (WEF, Davos Forum) held in Davos, Switzerland, President Trump stated, "I will demand an immediate interest rate cut," adding, "Interest rates must come down globally. They must follow our rates."
Although he did not explicitly mention the Fed during his Davos speech, he later met with reporters in the White House Oval Office and said he would meet with Chair Powell "at the appropriate time" to discuss the matter. When asked if he thought the Fed would respond to such a demand, he replied, "Yes," and said, "I will take a strong stance." He also expressed hope that interest rates would be lowered "a lot."
This statement is President Trump's first message related to interest rates since taking office three days ago on the 20th. Having criticized the Fed's high interest rate policy since his presidential campaign, he has quickly begun pressuring the monetary authorities for rate cuts immediately after assuming office. Trump's aides had even proposed a 'shadow Fed chair' plan before his inauguration to weaken Chair Powell's power by nominating a successor early.
Trump's attempt to intervene in monetary policy is expected to place significant pressure on the Fed, which has hinted at moderating the pace of monetary easing several times. The Fed ended 30 months of monetary tightening last September and began cutting rates, lowering the benchmark rate from a peak of 5.25-5.5% to the current 4.25-4.5%, a 1 percentage point drop. However, due to a robust economy and concerns over inflation rebound, the Fed has indicated it will slow the pace of rate cuts. Trump's tariff hikes, illegal immigration restrictions, and tax cut policies raise concerns about upward pressure on prices. The market widely expects the Fed to keep the benchmark rate unchanged at the Federal Open Market Committee (FOMC) meeting on the 29th, the first since Trump's inauguration. In this context, Trump's public demand for an immediate rate cut is likely to intensify debates over the Fed's political independence.
"EU's Big Tech regulation is a form of taxation"... Possible tariff retaliation
During his Davos speech, President Trump strongly criticized the EU regulatory authorities' stringent sanctions on U.S. Big Tech companies. Targeting EU officials attending the forum, he said, "Whether you like it or not, these are American companies," and argued, "You should not do that (impose sanctions)." He added, "What worries me is that this (sanctions) is a form of taxation," and said, "We have very significant grievances with the EU."
Trump cited the case of Apple's tax penalty in Ireland as an example of the EU's excessive regulation. Previously, the European Commission ordered Apple to pay back taxes and interest amounting to 14.3 billion euros, ruling that the corporate tax benefits granted by the Irish government to Apple over several decades were illegal. Both the Irish government and Apple appealed to the European Court of Justice (ECJ), the EU's highest court, but last year the court ultimately sided with the European Commission.
The EU is known for having the strictest regulations on large technology companies worldwide, with U.S. Big Tech as a frequent target. Last year, the EU fined Apple 1.8 billion euros and Meta 798 million dollars, and launched its fourth antitrust investigation against Google. Currently, the EU is conducting dozens of investigations against Big Tech companies such as Apple, Google, and Meta. Additionally, the EU has implemented the Digital Markets Act (DMA) and Digital Services Act (DSA), known as laws to prevent Big Tech's unfair practices, tightening the noose on these companies. The EU's rationale is that Big Tech companies are blocking free competition within the EU through monopolistic practices and privacy violations.
In response, President Trump has stepped in as a fixer, warning against the EU's stringent regulations targeting U.S. Big Tech. Notably, Big Tech companies reportedly expanded their contacts with Trump even before his inauguration, expressing concerns about the excessive nature of EU regulations. Consequently, conflicts between the U.S. and EU governments over Big Tech regulation are expected to intensify. Earlier, CEOs and founders of Apple, Google, Meta, and Amazon all attended Trump's inauguration on the 20th, watching the event from the 'head table,' signaling the changing status and influence of Silicon Valley in Trump's second administration.
President Trump also told EU officials to their faces, "If you don't make products in the U.S., that's your privilege," adding, "Then, simply put, you will have to pay tariffs. The amounts will vary, but hundreds of billions, even trillions of dollars will flow into our treasury as tariff revenue," implying possible trade retaliation measures.
Bloomberg News reported, "Trump fiercely criticized the EU regulatory authorities targeting Apple, Google, and Meta," adding, "Trump's remarks mark the beginning of the long-anticipated clash between Trump and the EU over Big Tech crackdowns."
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