How Trump turned August into a drama-filled month for the U.S. economy

For the U.S. economy, it was far from a tranquil August.

Aside from debuting a new sound system in the Rose Garden, President Donald Trump has replicated his zeal for White House renovations in his ongoing shake-up of the U.S. economy. Over the past month, he's enacted tariffs on dozens of trading partners, fired the chief nonpartisan statistician, and opened a new front in his near-daily bombardment against the Federal Reserve.

It was a dramatic month with Trump taking fresh gambles that risk undermining U.S. financial credibility and make everyday life more expensive for Americans.

"Trump is clearly willing to take risks with the economy," Peter Harrell, an ex-international economics aide to President Biden, told Quartz. "He's clearly willing to put some uncertainty over the economy in the interest of what he sees as longer-term policy goals."

Other analysts worried about the possible damage. "The last few weeks have just been more needlessly disruptive drama," Joel Griffith, a senior fellow at the conservative Advancing American Freedom, told Quartz. "My fear is that this drama might ultimately result in more economic damage."

A surprise firing at the BLS

Trump kicked off August with the high-profile firing of Dr. Erika McEntarfer, the head of the Bureau of Labor Statistics which produces the U.S.'s key economic data.

He sacked her over major revisions within the July jobs report. Federal data showed U.S. employers added only 14,000 jobs in July. But it was the scope of the downward revisions that shocked many observers. Those indicated the U.S. economy added 258,000 fewer jobs than previously thought.

Trump didn't hide his frustration with the disastrous jobs report. "I believe the numbers were phony," he told reporters outside the White House shortly after he announced McEntarfer's firing over social media.

“So, you know what I did? I fired her. And you know what? I did the right thing,” he said, adding he had three people in mind that could replace her. The move quickly elicited comparisons to other nations like Argentina that had distorted economic data too.

Some Republicans delivered rare criticism that same day. “It seems a little impetuous,” Sen. Cynthia Lummis of Wyoming told Quartz at the time. “Statistics are what they are.”

Trump's aides quickly fanned out over the airwaves. White House economic advisor Kevin Hassett defended the firing as a step towards accountability at the agency, which has grappled with thinner staffing and budgets.

"I think the most important thing for people to know is that it’s the president’s highest priority that the data be trusted and that people get to the bottom of why these revisions are so unreliable,” Hassett told NBC News.

Within a week, Trump decided on conservative economist E.J. Antoni as his pick to take over the BLS. Antoni quickly drew bipartisan criticism from economists on the left and right concerned that he could interfere with the agency's nonpartisan number-crunching on wages, inflation, and more. Antoni must still be confirmed by the Senate before getting onboard.

A new global tariff regime

Trump hasn't stopped reaching for tariffs. A flurry of letters started going out in July to scores of trade partners that assigned tariff rates if they didn't quickly strike a deal with the Trump administration. South Korea, Japan, the European Union, and many more were put on notice, sending foreign capitals scrambling to secure favorable terms from Washington.

Still, Trump had developed a reputation for 11th hour extensions of tariff deadlines. The Financial Times even coined TACO earlier this year, or shorthand for "Trump Always Chickens Out."

But that wasn't the case as the clock struck midnight on Aug. 7. At that point, double-digit tariffs kicked in for dozens of countries spanning the globe from Brazil to Taiwan and set in motion a trade war with little precedent in modern times. Meanwhile, Beijing won another 90-day extension to keep ironing out a sweeping trade agreement.

India, in particular, angered the Trump administration. Throughout August, Trump has sought to secure a peace deal between Russia and Ukraine, and end a brutal three-year war. But White House officials cast India as an obstacle. They blame Delhi for keeping up its purchases of Russian oil and argue it deprives the U.S. of crucial leverage over Russian President Vladimir Putin.

China and some European countries are still Russia's biggest oil customers. Treasury Secretary Scott Bessent at one point accused India of profiteering from Russian oil.

Griffith estimates that India's tariffs amount to a $300 tax increase on U.S. "We could be pursuing free trade with free peoples and our allies," Griffith said. "Instead, we're slapping punishing tariffs on them, harming their economy and at the same time our own."

A fresh assault on the Federal Reserve

At the end of July, Fed officials voted to hold interest rates steady, the fifth time they did so this year. That did little to pacify Trump in his brazen campaign to overhaul the Federal Reserve and render it more acquiescent to his desire to lower borrowing costs.

Trump got one step closer to his goal of managing monetary policy after Federal Reserve Governor Adriana Kugler stepped down five months ahead of her term's scheduled end. That provided him an opening to name White House aide Stephen Miran to the slot, a fierce defender of Trump who sided with him in publicly pushing for lower interest rates from the central bank. The Senate must confirm him first.

The president threatened to sue Federal Reserve Chair Powell over the steep cost of the Fed's ongoing renovations at its headquarters. White House aides, though, didn't spell out what the case against Powell could be or issue any timelines.

"I won’t speak on it any further, I will allow the president to do that himself," White House Press Secretary Karoline Leavitt said on Aug. 12. Trump dropped it and didn't mention it again.

At a major speech during the Jackson Hole economic conference, Powell opened the door to an interest rate cut in September. He said the "balance of risks" had started shifting in a way that might "warrant adjusting our policy stance." He emphasized any decision to cut rates would be solely driven by economic considerations and nothing else.

Powell's speech was well-received by investors and financial markets. Simultaneously, Trump's allies had began building a case against Lisa Cook, a Federal Reserve Governor appointed by then-President Biden in 2022.

Federal Housing Finance Agency director Bill Pulte posted allegations of mortgage fraud against Cook on social media, and quickly issued a criminal referral to the Justice Department for further investigation. Cook held firm and said she wasn't stepping aside while expressing a willingness to answer questions about her financial history.

Within days, Trump threatened to fire her in a social media post. Then, he ousted her in a legally dubious maneuver.

Cook's firing drew shock from longtime analysts. Wall Street veteran Peter Berezin posted a quote on social media commonly attributed to 20th century Peruvian authoritarian leader Óscar Benavides: "For my friends, everything. For my enemies, the law."

Now Cook is embroiled in a major legal battle that will test the Fed's independence from the executive branch. On Friday, lawyers for Trump asserted he had enormous power to fire Cook and other members of the Fed in a federal court hearing around her dismissal. The two-hour federal court hearing ended with no resolution, but the saga will stretch into September and beyond.