29 Sept 2025
Former President Trump continues his efforts to oust Lisa Cook from the Federal Reserve Board, citing alleged mortgage loan irregularities, while also threatening retaliatory export restrictions on advanced technologies against countries imposing digital service taxes. These actions have intensified concerns about the Federal Reserve's independence and created significant global trade uncertainties, impacting European companies and potentially leading to higher consumer costs in the US.
Former President Trump is actively seeking the removal of Lisa Cook, a member of the Federal Reserve Board of Governors, accusing her of misstatements regarding mortgage loans. He announced her immediate dismissal via social media, claiming sufficient grounds for her termination, which led to an initial decline in the dollar's value. Trump's perceived motive is to increase the number of votes within the Fed that favor interest rate reductions, potentially shifting the balance of power if Cook is replaced.
Lisa Cook, appointed by President Biden in 2022, maintains that Trump lacks the authority to fire her and has no intention of resigning. Her lawyers have issued a statement challenging Trump's claims as baseless and unlawful, vowing to take necessary steps to prevent such an illegal act. Cook's stance on interest rates is data-driven, resisting premature cuts, and her term is set to conclude at the end of 2038 unless legally removed.
Historically, no U.S. president has removed a Fed governor from office; federal law stipulates specific causes for removal, such as inefficiency, neglect of duty, or malfeasance. While Cook's alleged mortgage loan issues could fall under these categories if proven, Democratic senators have strongly opposed Trump's move, questioning its legality and viewing it as an autocratic attempt to consolidate power and deflect from his own political shortcomings, arguing it clearly violates Fed law and should be challenged in court.
Trump has threatened retaliatory export restrictions on advanced technologies and semiconductors against countries that impose digital service taxes on American tech giants like Amazon, Google, and Facebook. He argues these digital taxes discriminate against U.S. technology companies and demands an immediate cessation of such policies, indicating continued uncertainty in trade tariffs, particularly for specific goods like chips.
A week prior, the U.S. and the European Union agreed to remove unjustified trade barriers and avoid customs duties on electronic transmissions. However, the EU explicitly stated it has no intention of altering its digital regulations, such as the Digital Markets Act (DMA) and Digital Services Act (DSA). While some countries, like Canada, have suspended their digital taxes to pursue negotiations, others, like the UK, maintain a 2% tax on revenues from search engines, social media, and online marketplaces, aligning with the OECD's efforts to establish a new international tax system to replace digital taxes, though these efforts could face U.S. opposition.
The ongoing uncertainty surrounding tariffs is forcing European companies to make difficult decisions, with increased costs. For instance, Erbe, a German medical equipment firm, plans to boost investment in the U.S. to avoid tariffs, potentially reducing its R&D budget and transferring capital and knowledge from Germany to the U.S. This trend could weaken Germany's position as a technology hub. In the short term, costs are passed to consumers or necessitate U.S. investment, while long-term effects include reduced R&D, capital transfer to the U.S., a weakened traditional European base, and increased inflation for American consumers due to tariff pass-through.
Two important economic data releases are expected later in the day: July durable goods orders and the housing price index.
Trump's actions represent a severe blow to the Federal Reserve's independence, implicitly demanding the Federal Reserve to align with his short-term governmental policies.
| Issue | Allegation | Motive | Impact | Cook's Stance | Precedent | Opposition | Target | Products | Consequence | EU Position | Context | Outlook | Challenge | Response |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Trump's Attempted Removal of Lisa Cook | Inaccurate statements on mortgage loans | To increase votes for Federal Reserve interest rate cuts | Weakened dollar, threat to Fed independence, market uncertainty | |||||||||||
| Legal and Political Resistance | Refuses to resign, lawyers to challenge Trump's authority | No President has previously removed a Fed member for political reasons | Democratic senators view action as autocratic, violating Fed law | |||||||||||
| Threat of Export Restrictions | Countries imposing digital service taxes on U.S. tech firms | Advanced technologies and semiconductors | Continued global trade uncertainty, potential supply chain disruption | |||||||||||
| EU Digital Tax Stance | Will not alter Digital Markets Act (DMA) or Digital Services Act (DSA) | Despite U.S.-EU trade talks, EU regulations remain firm | Ongoing transatlantic trade friction, OECD efforts for global tax reform challenged | |||||||||||
| Impact on European Businesses | Weakened European tech base, higher inflation for U.S. consumers | Uncertainty of tariffs and increased operational costs | Investment shift to U.S. (e.g., German firm Erbe), reduced R&D |
