Trump and Powell on collision course without easy escape

President Trump is threatening to fire Federal Reserve Chair Jerome.

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Powell unless he cuts interest rates to cushion the blow from his tariffs.

The problem is twofold. It isn't clear the president has the legal authority to dismiss Powell before his term ends next year.

And Trump's trade war has made rate cuts more difficult for now because the Fed fears acting to shore up the economy could worsen inflation.

That tension has left the two men on a collision course without any easy escape-unless Trump backs down on tariffs or until the economy shows signs it is crumpling under the weight of the import duties.

"It is the most complex hand any Fed chair has been dealt," said Patrick McHenry, a Republican congressman from 2005 until January who chaired the House Financial Services Committee for the last two years.

The trade war threatens to touch off a contentious showdown between the White House and the Fed that threatens an unprecedented legal standoff or a rollback of the institution's longstanding autonomy to set interest rates as it deems fit.

During the president's first term, Trump badgered Powell to lower interest rates but never followed through on threats to sack the man he installed to lead the central bank in 2018.

In part, that was because the Fed ultimately moved interest rates in the direction Trump wanted-down-though often not fast or large enough for the president's liking. Powell also made clear that he would not leave his position if asked because he doesn't believe the law allows him to be dismissed over a policy dispute.

The second term is turning out to be different. Across his administration, Trump has sought to install loyalists in key positions whose credentials have been challenged by mainstream experts.