Recently, former U.S. President Donald Trump made a significant statement on Truth Social, warning countries around the world that he would take strong measures against nations implementing digital taxes, digital service legislation, and digital market regulations that discriminate against American tech companies. He warned that if these practices are not revoked, the U.S. would impose high tariffs on goods exported to the U.S. from those countries and restrict the export of high-end technology and chips. This not only represents another strong intervention by the Trump administration in global digital economy rules but also signals a potential escalation of a global trade war over digital taxes and tech hegemony.
- Trump's "Digital Tariff" Threat: Protecting American Tech Giants
Tough Stance: Trump stated on Truth Social that as President of the United States, he would firmly oppose countries that attack American tech companies. He believes that digital taxes, digital service legislation, and digital market regulations are designed to harm or discriminate against American technology, and outrageously provide a free pass to China's largest tech companies.
Clear Warning: He issued a warning to all countries implementing digital taxes, legislation, rules, or regulations: unless these discriminatory measures are revoked, the U.S. will impose high additional tariffs on products exported to the U.S. from those countries and implement export restrictions on highly protected American technology and chips.
"No longer a piggy bank or punching bag": Trump emphasized that the U.S. and American tech companies are no longer the world's "piggy bank" or "punching bag." He demanded that countries respect the U.S. and its outstanding tech companies, or "please bear the consequences."
- Trump Fires Fed Governor Cook: An Unprecedented Attack on Central Bank Independence
While declaring war on global digital taxes, Trump also launched an unprecedented attack on the independence of the Federal Reserve.
Firing Cook: President Donald Trump announced on Monday that he had fired Federal Reserve Governor Lisa Cook, marking a significant escalation in his attack on the independence of the U.S. central bank for refusing to quickly cut interest rates.
Accusations and Rebuttals: In his dismissal letter to Cook, Trump accused her of making false statements when applying for a mortgage, claiming her "deceptive conduct and potential criminal behavior regarding financial matters" raised doubts about her ability and credibility as a financial regulator. However, Cook stated in a statement that President Trump claimed to have "reason" to fire her, but there was no legal basis for such action, and he did not have the authority to do so, adding, "I will not resign." Cook has hired prominent attorney Abbe Lowell to represent her, who stated that they would take all necessary measures to prevent Trump from attempting illegal actions.
Legal Hurdles: The Federal Reserve Act of 1913 restricts the President's unilateral power to dismiss Federal Reserve governors, allowing the President to do so only for "just cause." While the law does not explicitly define what constitutes "cause," it has historically been understood as misconduct or neglect of duty. The Supreme Court may ultimately rule on the legality of her dismissal.
Political Implications: Trump's decision to fire Cook may be challenged in federal court. If Trump ultimately succeeds in removing Cook, he would be able to nominate her successor and reshape the Federal Reserve Board in the coming years.
- Threats to Fed Independence: Increased Market Uncertainty
Trump's ongoing attacks on the Federal Reserve have raised growing concerns among investors, who believe that the Fed's independence in formulating monetary policy is crucial for the U.S. as the global reserve currency.
Market Uncertainty: Edward Mills, Managing Director at financial consulting firm Raymond James, stated that Trump's firing of Cook "marks an unprecedented moment for the independence of central banks, indicating that the White House is increasing direct influence over monetary policy decisions." He believes that the market may view this attack on the Fed's independence negatively, exacerbating uncertainty about future policy directions.
Long-standing Grievances: Before Cook's dismissal, Trump had been complaining for months about the Federal Reserve and its Chairman Jerome Powell for not cutting interest rates as the President desired. Trump had repeatedly suggested that he might fire the Fed Chairman over monetary policy issues, but ultimately did not follow through.
- Trade Agreements and Tariffs: Balancing the Global Economy
EU and U.S.: The week prior, the U.S. and the EU issued a joint statement agreeing to jointly "address unreasonable trade barriers" and that "no tariffs will be imposed on electronic transmissions." The 27 EU member states also confirmed that they would not impose internet usage fees.
China and U.S.: China and the U.S. will initiate a new round of tariff negotiations next week, during which clearer tariff details will be established.
Conclusion:
Trump's threat to impose tariffs on "countries implementing digital taxes, digital service legislation, or digital market regulations" marks a strong stance by the U.S. on global digital economy rules. Meanwhile, his firing of Federal Reserve Governor Cook represents an unprecedented attack on central bank independence. Together, these two events signal that global trade and financial markets will face greater uncertainty. Investors need to closely monitor the policy direction of the Trump administration and its potential far-reaching impacts on the global economy and financial markets.
Related Reading: Trump's Crypto Advisor David Bailey: The Next Bitcoin (BTC) Bear Market May Be Years Away
Original Article: “Trump Warns the World: Countries Imposing Digital Taxes Will Face Tariffs and Chip Export Restrictions”
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