President Donald Trump has lashed out at the Federal Reserve chairman, after Jay Powell refused to cut interest rates to Trump’s liking, a move that would have given the president ammunition to escalate his trade war with China.

“As usual, the Fed did NOTHING!” Trump tweeted on Friday, after Powell announced that he would “sustain the expansion” of the US economy, but not by slashing interest rates by a whole percentage point, as Trump has repeatedly called for. Instead, Powell is likely to lower rates by around a quarter of a percentage point, from their current level of 2.25 percent.

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Interest rates are usually lowered during periods of recession to stimulate the economy, as low rates make borrowing cheaper and increase consumer spending and investment. However, when rates are too low, they can spur unsustainable growth and fuel rising inflation.

Crucially for Trump, a dramatic lowering of rates could help sustain the US’ roaring economy heading into his re-election campaign, and insulate it from damage wrought by the president’s ongoing trade war with China. Trump made no secret of this on Friday, asking “who is our bigger enemy, Jay Powell or Chairman Xi?”

....My only question is, who is our bigger enemy, Jay Powell or Chairman Xi? — Donald J. Trump (@realDonaldTrump) August 23, 2019

Trump then revealed that he would step up his battle with Beijing with or without Powell’s help. “Our great companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA” It is unclear, however, what legal mechanism Trump has at his disposal to force these companies home.

The president also announced he would slap further tariffs on Chinese imports, and will order postal carriers to search for and refuse packages of Fentanyl originating from China. Fentanyl is a deadly synthetic opioid that has contributed to the US’ skyrocketing overdose rate; its misuse was declared a public health emergency by the Department of Health and Human Services in 2017. The Trump administration sanctioned three Chinese Fentanyl suppliers on Wednesday, and Trump has accused Chinese President Xi Jinping of not doing enough to curb the supply of the killer narcotic.

....all deliveries of Fentanyl from China (or anywhere else!). Fentanyl kills 100,000 Americans a year. President Xi said this would stop - it didn’t. Our Economy, because of our gains in the last 2 1/2 years, is MUCH larger than that of China. We will keep it that way! — Donald J. Trump (@realDonaldTrump) August 23, 2019

Refusing to back up Trump’s trade salvo, Powell instead said that he would act to keep the economy ticking over, not to facilitate the president’s mercantilist conflict with China. “Setting trade policy is the business of Congress and the Administration, not that of the Fed,” he said on Friday.

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