New York — April 21, 2025 — U.S. stock markets took a sharp hit Monday following escalating tensions between President Donald Trump and Federal Reserve Chair Jerome Powell, reigniting investor fears over central bank independence amid a backdrop of persistent trade friction.

The Dow Jones Industrial Average dropped over 600 points by midday, while the S&P 500 and Nasdaq both posted losses exceeding 2%, as markets reacted to President Trump’s latest remarks suggesting he may remove Powell from his post.

“Frankly, I think it’s time for a change,” Trump said during a press conference, criticizing the Fed’s recent interest rate decisions and accusing Powell of “suffocating” economic growth. The president’s comments sparked immediate concern on Wall Street, where stability at the Federal Reserve is seen as essential to long-term investor confidence.

The threat to the Fed’s independence comes at a time when markets are already under pressure from renewed U.S. trade tensions. Ongoing tariff disputes and uncertainty over international trade agreements have continued to roil global supply chains and weigh on investor sentiment.

Analysts warn that political interference in monetary policy could lead to increased volatility and higher risk premiums. “Markets can handle bad news, but they struggle with uncertainty and the idea of a politicized Fed introduces a whole new level of instability,” said one senior economist.

This is not the first time President Trump has clashed with Powell, whom he appointed in 2018. However, talk of dismissal has historically been seen as a red line one that, if crossed, could provoke constitutional questions and shake the foundations of the U.S. financial system.

As investors await further clarity from both the White House and the Federal Reserve, all eyes will be on upcoming economic data and any indication of potential Fed policy shifts in response to the political pressure.