President Donald Trump is ramping up pressure on Federal Reserve Chair Jerome Powell, demanding interest rate cuts to offset the fallout from his trade tariffs — a move that could set off a high-stakes legal and political battle.

According to the Wall Street Journal, Trump has suggested he may try to remove Powell if the central bank doesn’t act, but it remains unclear whether the president has the authority to do so before Powell’s term ends in 2026. Meanwhile, the Fed is in a bind. Cutting rates to support the economy could worsen inflation — already above the Fed’s 2% target — a dilemma made worse by Trump’s aggressive tariff policies.

The confrontation, first reported in depth by the Journal, underscores growing tension between the White House and the traditionally independent central bank. Powell has signaled he won’t step down voluntarily, saying, “Our independence is a matter of law.”

The dispute comes as the administration leans into reshaping institutions with loyalists and challenges longstanding norms — including protections for regulatory officials like Powell. According to the Journal, if Trump attempts to fire the Fed chief, Powell is likely to mount a legal challenge that could land before the Supreme Court.

The latest friction emerged after Powell noted the Fed faces “difficult trade-offs” amid trade-related economic shocks. Trump responded swiftly, declaring on social media that Powell’s term “cannot come fast enough.”

While the president’s pressure is not new — he frequently criticized Powell during his first term — the stakes are higher now. Trump’s latest round of tariffs has sparked market volatility and could dampen economic growth, raising questions about how the Fed should respond.

Some GOP lawmakers have warned against efforts to oust Powell, saying it could destabilize both financial markets and the president’s broader agenda. “It’s destabilizing at a rather unstable time,” said former Rep. Patrick McHenry, who previously chaired the House Financial Services Committee.

Read the full report from The Wall Street Journal here.