[The Viewpoint of Dongki Kim] Trump vs. the Fed

Tariff Policy Hits the Fed Wall
Trump Launches Fierce Criticism at Chair Powell
Clashes Over Serial Dismissals of Independent Commissioners

On April 17, former U.S. President Donald Trump fiercely criticized Federal Reserve (Fed) Chair Jerome Powell. Trump harshly commented that Powell's decisions are always too late and wrong, and demanded that Powell step down immediately. Powell, who was appointed as Fed Chair during Trump’s first administration, was reappointed under the Biden administration and his term is set to expire in May of next year.

Trump’s abrupt tariff war caused turmoil in the U.S. Treasury market in mid-April, but the market soon regained relative stability. In response, Powell took a hardline stance and criticized Trump’s tariff policy. In contrast to the European Central Bank (ECB) and the People’s Bank of China, which both cut interest rates, the Fed did not acknowledge the need for a rate cut. It was not difficult to predict Trump’s outrage after running up against the independent and conservative Fed. As Trump began to discuss dismissing Powell, both the market and experts focused on whether the President could remove the Fed Chair or its board members without legitimate cause.

The Trump administration recently dismissed members of commissions that are known to maintain independence and operate with relatively little presidential control. In January 2025, Trump dismissed a member of the National Labor Relations Board (NLRB), and in February, a member of the Merit Systems Protection Board (MSPB). Then, in March, Trump dismissed Alvaro Bedoya and Rebecca Kelly Slaughter, both Democratic members of the Federal Trade Commission (FTC). The principle that the independence of such commissions established by Congress is protected was set by the U.S. Supreme Court in the 1935 case of Humphrey’s Executor.

President Franklin D. Roosevelt dismissed William E. Humphrey, an FTC commissioner, while pursuing economic reform policies. The FTC, as an independent regulatory agency, was governed by law stipulating that commissioners could not be removed by the President without "just cause." After Humphrey’s death, his executor sued the federal government for unpaid salary due to his unlawful dismissal. The Supreme Court ruled that the President’s removal was illegal and that FTC commissioners could not be dismissed "merely for political reasons or differences of opinion." In other words, the precedent established that independent agencies like the FTC, which have quasi-legislative and quasi-judicial functions created by Congress, can have limits on presidential removal power, ensuring their independence from political pressure.

However, Trump’s recent dismissals of independent commission members directly defied this Supreme Court precedent. If this becomes justified, the Fed could also be at risk, as there is little legal distinction between the Fed and the FTC. Several dismissed commissioners have filed lawsuits in response, and the Fed is closely watching these developments. Given the widely shared, implicit understanding of the importance of the Fed’s independence, the Supreme Court may be reluctant to overturn its previous precedent. The Court could also distinguish the Fed from other agencies and grant it an exception.

After Trump attacked Powell, Democratic Senator Elizabeth Warren warned that if Trump were to remove Powell, the market would collapse. A few days ago, Trump called Powell "completely incompetent," but stepped back, saying he would not dismiss Powell during his term. However, it is uncertain when he might change his stance. This is why the court’s judgment on the status of commissions like the Fed has become even more significant.

Kim Donggi, author of "The Power of the Dollar" and attorney