Trump's heavy hand tightens grip on U.S. economy

• Trump is trying to reverse his sagging approval ratings by brute force, leaning on populist instincts to deliver visible cost relief before November.
• The result: institutional stability and capitalist norms — like so much else in the Trump era — are increasingly subordinate to raw presidential power.

Zoom in: Trump has denied knowledge of the Justice Department's criminal inquiry into Fed chair Jerome Powell, which is nominally focused on cost overruns from the central bank's renovation of its D.C. headquarters.

• But Powell and his predecessors see the probe as the culmination of a months-long White House pressure campaign against the Fed, which has resisted cutting interest rates as fast as Trump wants.
• "That jerk will be gone soon," Trump said of Powell during an economic speech in Detroit Tuesday.

The big picture: In the first 13 days of 2026, Trump has targeted the biggest drivers of voters' cost-of-living anxiety with direct, highly visible interventions outside the normal policy-making process.

• Energy costs: Trump has openly acknowledged that Venezuela's vast oil reserves factored into his decision to capture its leader, Nicolás Maduro. He urged Big Oil executives to invest $100 billion to revive Venezuela's decrepit infrastructure — then threatened to shut Exxon out of the effort after its CEO called the country "uninvestable."
• Housing costs: Trump ordered a $200 billion purchase of mortgage-backed securities in a highly unusual effort to lower mortgage rates. He also proposed a ban on "large institutional investors" from buying single-family homes, seeking to force down prices by squeezing corporate players out of the housing market.
• Consumer debt: Trump called for capping credit card interest rates at 10% for at least a year — an intervention into consumer lending aimed at delivering immediate relief to borrowers. Banks and lenders warned the move could restrict access to credit, especially for riskier consumers.

Between the lines: Individual stocks have gotten hammered by Trump's recent intercessions, but the broader market has largely learned to discount the chaos.

• That muscle memory traces back to the "TACO trade" ("Trump Always Chickens Out") — Wall Street shorthand for investors buying the dip on Trump's tariff threats on the assumption he'd eventually back off.

• Many of these policies also lack the durability of a legislative solution, relying instead on executive orders or thundering pronouncements on Truth Social.

Still, the escalation — particularly the unprecedented steps to erode the Fed's independence — has contributed to a trend of bond yields rising, the dollar slipping and investors flocking to gold.

• Treasury Secretary Scott Bessent privately warned Trump on Sunday that the Powell investigation "made a mess" and could be bad for financial markets, as Axios first reported.
• Sen. Thom Tillis (R-N.C.), a key member of the Senate Banking Committee, vowed to block any action on Powell's replacement. Several other Republicans in Congress also raised alarms.

What they're saying: "President Trump was given a resounding mandate by the American people to smash Washington, D.C.'s obsession with consensus orthodoxy that has let Americans down," White House spokesman Kush Desai said in a statement.

• "The Trump administration is turning the page on Joe Biden's economic disaster by implementing traditional free market policies that do work – like deregulation and tax cuts – while rectifying the America Last policies that have Americans behind."

The bottom line: The economy's "invisible hand" is giving way to a clenched presidential fist.