Trump considers cutting China tariffs by 65%, says he never wanted to fire Fed’s Powell

President Donald Trump is now weighing a huge cut to the trade penalties he dropped on Chinese imports, with new tariff levels possibly falling by more than half.

The numbers being tossed around range from 50% to 65%, based on current discussions happening inside the White House, according to The Wall Street Journal. A senior White House official reportedly said the team is also looking at a tiered tariff system – one that copies a structure pushed last year by the House committee on China.

Under that version, 35% levies would apply to goods that don’t touch national security, while 100% tariffs or more would cover things that Washington sees as critical to American strategic interests. The proposed rollout for these tiers would stretch across five years.

Trump publicly confirmed on Tuesday that the 145% tariffs slapped on Chinese products during his second term were not going to stay where they are. “But it won’t be zero,” he told reporters, backing away from earlier threats without pulling the rug out entirely. Investors had been sweating over his recent stance, so the comment gave them a bit of breathing room.

Over in Beijing, government officials responded by saying they’re open to new trade talks—but only if the White House cools down with the threats.

White House steps away from Powell firing after legal warnings

Last night, Trump also addressed a separate controversy by claiming he never planned to fire Federal Reserve Chair Jerome Powell, even though talk of removing him had picked up steam. “That’s a media creation,” Trump said, pushing back on the idea that he was trying to go after Powell personally.

Still, inside the White House, some officials weren’t so sure. According to the Journal, as Trump’s public criticism of Powell grew louder, legal advisers quietly dug into whether the president could remove the Fed chair “for cause.” That legal phrase only works if they can prove serious misconduct.

Federal law protects Fed governors from being fired mid-term unless there’s a real legal reason, and courts usually interpret that to mean criminal or ethical failure.

The internal talks on getting rid of Powell were shut down earlier this week. Trump told his senior team he was dropping it. The decision came after Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick told him it would be a disaster. 

They said markets could spiral, and even if he fired Powell, the rest of the Federal Reserve board would still vote on interest rates the same way. Lutnick added that the chaos wouldn’t lead to lower rates—Powell’s replacement would likely think the same way on policy.

By Tuesday afternoon, Trump cleared things up in front of reporters in the Oval Office, saying he had “no intention” of pushing Powell out. His tone changed from the day before. “This is a perfect time to lower interest rates,” Trump said. “If he doesn’t, is it the end? No. It’s not.”

But Wall Street doesn’t see a rate cut coming anytime soon. Analysts said that even if Trump could remove Powell, it wouldn’t matter. The Fed’s 12-member rate-setting committee doesn’t support a cut right now. The central bank lowered rates by one point last year after inflation came down, trying to avoid a recession they didn’t need.

The tariffs themselves have been a problem for the Fed. Officials worry that higher import taxes could drive prices up, which then fuels inflation. And even if people start spending less or companies pull back on hiring, those risks could stick around.

One more headache for Trump: the Fed governor he promoted last month—Michelle Bowman—isn’t helping his case. Bowman, now the vice chair for bank supervision, is one of the loudest voices warning against lowering interest rates too quickly. She’s been on record saying that rushing to cut could mess up the economy more than it helps.

That leaves Trump in a corner. The Fed’s independence is something bond investors care deeply about. If the government is seen as interfering too much, foreign investors might start backing away from U.S. Treasury bonds. That would mean less demand and less demand means higher interest rates down the line.

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