Fed Governor Steps Down Early, Giving Trump Opportunity to Appoint New Official

Lori Chavez-DeRemer, the Labor secretary, echoed Mr. Trump’s concerns about Dr. McEntarfer on social media and said that William Wiatrowski, the deputy commissioner, would serve as acting commissioner until a replacement is found.

According to the data released early Friday, U.S. employers added 73,000 jobs in July, less than economists expected, and the unemployment rate rose slightly. The report on also significantly revised down the data on hiring from May and June by a combined 258,000 jobs, suggesting the labor market was under greater strain than initially believed. That moved the bond market in particular, with U.S. Treasury yields falling sharply as investors anticipated that the Federal Reserve could be more willing to cut interest rates to bolster a flagging economy.

The dollar also dropped against other major currencies and the S&P 500 ended the day down 1.6 percent, capping one of the index’s worst weeks since Mr. Trump wrought chaos across the global trading system when he unveiled his first round of steep tariffs in April. The benchmark fell 2.4 percent for the week.

The jobs data offered only the latest indication that Mr. Trump’s policies — particularly his global trade war, which the president expanded on Thursday — had started to put the squeeze on the economy. Other economic data released this week offered fresh evidence that Mr. Trump’s duties had slowed trade and started to send prices higher.

The developments created new complications for the Fed. The central bank opted to hold interest rates steady earlier this week in an attempt to keep prices from soaring, even as some called on the Fed to lower borrowing costs to ease strain in the labor market. In his first comments after the release of the jobs report, Mr. Trump renewed his attacks on the Fed and its chair, Jerome H. Powell, calling him a “disaster” and demanding he lower rates.

Later Friday, the Federal Reserve announced that Adriana D. Kugler will step down from her position as a governor on the Federal Reserve Board on Aug. 8. Her term was set to expire in January and her early resignation gives Mr. Trump the opportunity to appoint someone who could replace Mr. Powell as chair.

Here’s what else to know:

• Higher tariffs: The president late Thursday announced a dramatic widening of his trade war, slapping major new tariffs on dozens of countries that take effect on Aug. 7. Switzerland was stunned by a 39 percent tariff, among the highest in the world. Goods from Syria, Laos and Myanmar were hit with rates of 40 to 41 percent. India received a 25 percent tariff, as Mr. Trump’s previously warm relationship with Prime Minister Narendra Modi has soured. All countries not issued new tariff rates would be subject to a base line 10 percent rate, while Japan, South Korea and the European Union, which recently secured trade agreements with the United States, received the rates they had negotiated.

• China factories: Mr. Trump’s order also established a 40 percent tariff on anything that Customs and Border Protection determines has been “transshipped” to avoid higher duties on goods coming from their country of origin. Experts said the move was an effort to box in China, with its mammoth factory infrastructure, and could weigh on the Trump administration’s ongoing talks with Beijing over a trade deal.

• Mexico reprieve: The United States and Mexico agreed to keep talking about a potential trade deal for 90 more days, averting the heavier tariffs Mr. Trump had threatened to impose on America’s largest trading partner just before they were set to begin. But Mr. Trump imposed a 35 percent tariff on Canada, to the north,

• Trade deficit: Mr. Trump’s executive order said he was acting because “large and persistent annual U.S. goods trade deficits constitute an unusual and extraordinary threat to the national security and economy of the United States.” While the United States runs a small surplus in services trade, its deficit in goods reached a record $1.2 trillion last year and has been widening for decades.

• Federal jobs: The federal government shed 12,000 jobs in July as the Trump administration continued to aggressively downsizes the federal work force. And manufacturing jobs fell by 11,000 last month, even though Mr. Trump is trying to use the tariffs to increase that number.

On Friday, investors parsed through the president’s latest tariff plans and how they might further drive up costs for companies and consumers. But it was a report from the Labor Department that caused the most alarm.

U.S. employers added 73,000 jobs in July, fewer than the roughly 100,000 that economists had expected, and the unemployment rate rose slightly. The report also revised down the data on hiring from May and June by a combined 258,000 jobs, suggesting the labor market was under greater strain than initially believed.

The weaker-than-expected hiring data, particularly the large downward revisions for May and June, raised concerns about the strength of the economy under Mr. Trump and created new uncertainty about the timing of the Federal Reserve’s next interest rate cut.

With the stock market swooning and his critics raising new questions about the efficacy of his economic policies, Mr. Trump took the extraordinary step of publicly calling into the question the veracity of the hiring data. In a social media post on Friday afternoon, he blamed, without evidence, a Biden administration appointee in the Bureau of Labor Statistics for producing faulty numbers.

Mr. Trump’s charge did little to soothe investors’ concerns about the economy, however, as the market remained lower throughout the afternoon.

“This is the first eye-opening bad number,” said Mark Hackett, chief market strategist at Nationwide. “It’s a reminder that volatility still exists.”

Investors had been “lulled into a sense of complacency” over the past few months as stocks surged, Mr. Hackett added. The market rally was headed for a pause, he said, but “the payroll number really changes the conversation.”

As recently as Wednesday, Jerome H. Powell, the Fed chair, described the labor market as “solid” when explaining the central bank’s decision to keep holding interest rates steady.

For Wall Street, the data on Friday cast fresh skepticism on that assessment.

The yield on 10-year Treasury bonds slid more than a tenth of a percentage point, a large move in that market that reflected expectations for lower rates. (Yields move inversely to prices.) The dollar also dropped sharply against other major currencies.

Traders’ bets on a September rate cut rose to more than 90 percent on Friday, up from roughly 40 percent the day before, according to CME FedWatch.

The Trump administration also seized on the weak hiring numbers to continue to hammer Mr. Powell to cuts rates soon, to jolt economic growth. Posting on social media, Mr. Trump said Mr. Powell should “substantially” lower rates. If he doesn’t, the Fed board should “assume control,” the president said.

Friday’s losses were steepest in the technology-heavy Nasdaq Composite index, which fell 2.2 percent. Stocks in Asia and Europe also lost ground on Friday.

The declines put a damper on a weekslong rally, supported by solid corporate earnings from many major technology companies. But the downward shift on Friday — the fourth consecutive daily drop for the S&P 500 — echoed Wall Street’s tariff-induced meltdown in April.

Back then, rounds of selling pushed the index to the brink of a bear market, before Mr. Trump paused his most punitive tariffs. By late June, the S&P 500 had surged to a record high and regained all the ground it lost in March and early April.

Analysts have noted that market declines fueled by fears of tariffs have tended to give way to rallies, as deadlines were extended or altered. But now that steeper tariffs are set to take effect on Thursday, a renewed escalation of Mr. Trump’s global trade war — coupled with signs of weakness in the economy — is injecting volatility into financial markets again.

“It’s kind of a warning sign about where the economy might be headed,” said Greg McBride, chief financial analyst at Bankrate. “The labor market is not nearly on a solid footing as we had thought.”

Eshe Nelson and Kailyn Rhone contributed reporting.

The opening on the board comes as Mr. Trump has been openly pressuring the Fed to cut interest rates and publicly berating Mr. Powell, saying he should cut rates or resign. The president has also toyed with firing Mr. Powell or naming a successor before Mr. Powell’s term as chair ends in May.

“It has been an honor of a lifetime to serve on the Board of Governors of the Federal Reserve System,” said Ms. Kugler said in a statement. “I am especially honored to have served during a critical time in achieving our dual mandate of bringing down prices and keeping a strong and resilient labor market.”

Ms. Kugler has served as a governor at the Fed since September 2023.

Mr. Powell said in a statement that Ms. Kugler “brought impressive experience and academic insights to her work on the Board.”

Kugler missed the FOMC’s most recent meeting on Wednesday. In a speech earlier this month, she said that the Fed should not cut interest rates “for some time” as tariffs trickle through to consumer prices. Bill Pulte, the Federal Housing Finance Agency director who has been pushing for Powell to resign, posted the news of Kugler’s resignation with a siren emoji.

Mr. Trump’s post came after the bureau released monthly jobs data showing surprisingly weak hiring in July and large downward revisions to job growth in the previous two months. Economists widely interpreted the report as evidence that Mr. Trump’s policies were beginning to take a toll on the economy, though the president insisted in a subsequent post that the country was “doing GREAT!”

Lori Chavez-DeRemer, the labor secretary, echoed Mr. Trump’s concerns about Dr. McEntarfer in a post on social media. She said William Wiatrowski, the deputy commissioner, would serve as acting commissioner during the search for Dr. McEntarfer’s replacement.

Dr. McEntarfer was appointed to her post by President Joseph R. Biden Jr. in 2023 and confirmed by the Senate in 2024, after a long career at the Census Bureau and other agencies, where she served under presidents of both parties, including Mr. Trump.

William W. Beach, who led the bureau during Mr. Trump’s first term, criticized the move to fire Dr. McEntarfer on Friday.

“It’s unfortunate,” he said. “This could set a precedent where bad news on many different fronts is a reason for dismissing a person.”

Mr. Beach, who was appointed by Mr. Trump in 2019 and remained in the role for the first two years of the Biden administration, said he had never felt pressure to manipulate the data under either president. Even if there were such pressure, he said, there is “no way” the commissioner could interfere in the revisions process, which is conducted by career employees.

Mr. Trump and his top aides have made a habit of attacking government agencies, researchers and watchdogs when they have produced findings that the president does not like. That has led to concerns that Mr. Trump could seek to interfere with the operations of the Bureau of Labor Statistics and other statistical agencies, particularly if the economy begins to take a turn for the worse.

Until now, however, most experts on the statistical system said they remained confident in the data produced by the agencies and had seen no evidence of political interference in their operations. Current and former agency staff members consistently echoed that message — in part, they said, because they trusted Dr. McEntarfer and her counterparts at the other major statistical agencies to protect their independence.

“If that pressure got too great, you would see people resigning rather than shape the numbers,” Mr. Beach said.

Economists across the ideological spectrum on Friday said Ms. Trump’s move to oust Dr. McEntarfer was likely to erode public confidence in the data published by the administration.

“If you want people to stop trusting the numbers coming out of the Bureau of Labor Statistics, firing the person who is confirmed by the Senate to make sure those numbers are trustworthy is a real good way to do it,” said Martha Gimbel, the executive director of the Budget Lab at Yale, who served in the White House under Mr. Biden.

Dr. McEntarfer could not immediately be reached for comment. The Department of Labor and the Bureau of Labor Statistics did not immediately respond to requests for comment.

Only hours earlier, Stephen Miran, the chair of the White House Council of Economic Advisers, offered a much different explanation for the jobs revision.

In an appearance on CNBC, he said much of the change was the result of “quirks in the seasonal adjustment process” and even the president’s own policies, particularly on immigration, potentially affecting hiring numbers for May and June. He made no mention of any concerns about manipulated data as he sought to recast the slowdown in July as a “pretty decent” jobs report.

Michael Strain, an economist at the conservative American Enterprise Institute, said: “President Trump is completely wrong in asserting there’s been any sort of anti-Trump bias in the labor market data. I think that assertion is wholly unsupported.”

Mr. Strain said that government data is revised frequently, and that doing so reflected a “standard” practice to ensure its quality. In this case, he acknowledged that the change was “historically large” but “doesn’t smell fishy,” citing a range of possible causes, from declining response rates to underfunding at federal agencies.

But now, a little over a week after the Japan deal was announced, significant discrepancies have emerged between how the United States and its trade partners are interpreting the spending commitments, underscoring the tenuousness of the pledges.

For Japan, its commitment to establish a fund for U.S. investment proved a pivotal factor in securing a more favorable, lower-than-threatened tariff rate of 15 percent. Nevertheless, from the deal’s announcement last week, Japanese and American officials appeared to hold diverging views on the specifics of the investment plan.

In revealing the U.S.-Japan agreement in a social media post, Mr. Trump said that in exchange for the reduced tariff Japan would funnel $550 billion, at his direction, into the United States, with America expected to receive 90 percent of the profits.

Ryosei Akazawa, Japan’s chief trade negotiator, conveyed a different message back to Tokyo: Japan would offer a blend of investment, loans and loan guarantees, totaling up to $550 billion, with profits to be allocated based on each side’s committed risk and financial contribution.

The scarcity of detail, and the absence of a publicly disclosed written joint agreement, prompted trade experts to question the substance of the investment proclamation. The deals with the European Union and South Korea appeared to be in similar predicaments.

Inputs

The cost of everything farmers use to produce their goods — machinery, fertilizer, herbicides, feed — has been rising, squeezing profitability. That will only pick up speed.

Most of the fertilizer American farmers use is imported. Some of that will continue to face previously announced 10 percent tariffs, while fertilizer that comes from Trinidad & Tobago, a major producer, and a number of countries in the Middle East will see tariffs as high as 30 percent.

Tariffs on steel and aluminum exporting countries will raise costs for things like tractors, fencing and grain bins. Machinery and equipment used in food manufacturing and packaging will be more expensive, too.

Imported Food

The United States imported $212 billion worth of agricultural products last year, according to the Agriculture Department. Some of that can be replaced by an increase in American-grown products, and the new increased tariffs do not meaningfully change the duty rates for the two countries that produced almost $89 billion of those imports, Mexico and Canada, because most food products are covered by a preexisting trade agreement among those countries and the United States.

Still, that leaves tens of billions of dollars worth of agricultural products that will soon be subjected to higher tariffs. The goods that will be most difficult to replace will be products that the United States may not have the climate, topography or infrastructure to grow immediately. That includes tropical fruits like pineapples and mangoes, coffee and chocolate, or the produce that can’t be grown year-round in the United States.

Howard Lutnick, the secretary of commerce, has suggested there could be exemptions for products not grown in the United States, but that hasn’t been formalized.

Retaliation

Retaliatory tariffs could impact the $176 billion worth of agricultural products the U.S. exported last year, making them less competitive.

“Given the ag sector’s dependence on exports, ag products are a very tempting target for retaliatory measures,” Darci Vetter, the chief agricultural negotiator during the Obama administration, said in an email.

A version of this can already be seen with soybeans, the biggest American agricultural export. More than half of American soybean exports go to China, and that country’s 10 percent retaliatory tariff — down from 125 percent after a temporary trade truce in May — has already taken a bite out of the trade.

Through May, the last month of data, $6.6 billion worth of soybeans have been exported to China in 2025. During the same time frame last year, $9 billion worth was sent to China.

Uncertainty

Even the trade deals said to be completed, like those with the European Union and Japan, leave as many questions as answers.

The White House has announced that Japan will buy more American rice and that the European Union will address barriers to trade beyond tariffs, like sanitary requirements for pork and dairy products. But the full details of the agreements have not been released, and it has become clear, in some cases, that there were disagreements between how the White House and other countries were interpreting their trade deals.

The decline is the latest indication that President Trump is shrinking the federal work force significantly. On Thursday, the Office of Personnel Management, the government’s human resources arm, said that the Trump administration was paying about 154,000 employees not to work since it began offering resignation incentives to federal workers.

But even that number, which represents only the share of workers who accepted an offer to resign early in exchange for months of pay, does not capture the full employment picture. It does not include the thousands of people who were laid off or fired.

Such a big revision is bad news on its own terms, showing much weaker growth than previously understood. But it is also bad for another reason: When hiring is consistently revised down, it often means the economy is in, or headed for, a recession.

Take the jobs report for September 2008, for example. The initial estimate, released on Oct. 3 of that year, showed a decline of 159,000 jobs, a clear sign that the swirling global financial crisis was hitting the U.S. labor market.

In reality, that figure severely understated the damage. A month later, the September estimate was revised to show a loss of 284,000 jobs. A month after that, the figure was revised again, to a loss of more than 400,000. Today, government data indicates the economy lost nearly 450,000 in September 2008.

Negative revisions can be a warning sign because of the way the jobs figures are calculated.

The monthly numbers are based on a huge survey of businesses and other employers. Not all businesses respond in time for the initial estimate, however, forcing government statisticians to fill in the gaps with a statistical technique that essentially assumes the businesses that didn’t respond behaved the same way as the ones that did.

That approach works fine during normal times. But during periods of rapid change, that assumption can be misleading. Businesses that fail to respond might be struggling to keep their doors open, for example. Or they might have shut down altogether.

Still, downward revisions aren’t always a sign of trouble. There was a steady stream of negative revisions during much of the Biden administration, for example, but unemployment stayed low and the job market remained strong.

Instead, they were fed a heap of insults and injuries. Along with the 25 percent rate, one of the highest in Asia and only a point lower than what was threatened on Liberation Day in April, India was informed that its existing trade barriers are “strenuous and obnoxious”; it will be charged an untold penalty for buying Russian oil; it is a “dead economy.” It’s archrival, Pakistan, was praised and promised an oil-exploration deal.

Hurt feelings aside, the results are confusing. Two of the biggest categories of exports to the United States from India are personal electronics, worth about $14 billion a year, and pharmaceuticals, worth $10 billion. Rajesh Sharma, executive director of India Cellular and Electronics Association, said smartphones were exempted from these tariffs; so did executives at pharmaceutical companies. But on Friday, after reading the executive order, the Global Trade Research Initiative in New Delhi concluded the opposite.

India’s stock markets dipped on the news for two days running. Indian and international banks wrote notices warning that the country’s generally hard-charging economic growth is likely to slow measurably as a result of the tariffs.

Then there are the unknown tariffs. On July 6, Mr. Trump wrote that countries aligned with the BRICS group, of which India is a founding member, would incur an additional 10 percent penalty. Then on July 14, he said that, if Russia didn’t make peace with Ukraine within 50 days, he would punish its trading partners with “secondary tariffs” of 100 percent.

That figure is making Indians worry anew. Mr. Trump added “plus a penalty” to the 25 percent rate imposed on India, for buying Russian oil and weapons. Shashi Tharoor, a prominent member of the opposition, spoke to an Indian news agency about the possible impact. “There’s even talk of a 100 percent penalty,” he said, “which will destroy our trade with America.”

There is evidence that Indian buyers of Russian oil were already pulling back before the executive order. “Indian refiners have reduced Russian crude purchases this week,” said Sumit Ritolia, an analyst at Kpler, which tracks shipping and commodities. They were already “looking to further diversify, amid rising concerns over potential U.S. sanctions,” having spent years taking advantage of discounted Russian oil to reduce their imports from the Persian Gulf.

Reducing the United States’ trade deficit is one of the Trump administration’s goals, so persuading India to buy more American oil and gas would make sense. Last year, India exported $45.7 billion more goods to the United States than it imported. It spent about three times as much importing oil. If a third of that were redirected to American sources, their bilateral trade would be evened out.

Mr. Trump’s angry barrage of social media has complicated further negotiations. The breakdown of trust between Narendra Modi, India’s prime minister, and whom he called his “true friend,” Mr. Trump, is likely to make it harder to complete any deal, analysts say. Indian news outlets have reported that Mr. Trump wanted to iron out some outstanding issues, after four rounds of direct talks between the two sides, in a phone call with Mr. Modi. The Indian government was anxious to avoid any of his last-minute surprises.

The U.S. commerce secretary accused India of “slow-rolling” its trade negotiations. Indian officials and analysts say the friction is caused by a fundamental difference of approach. Mr. Trump has a penchant for quick, top-down deal-making. India’s bureaucracy moves at a methodical pace, especially when it comes to opening up the agriculture market, which is politically sensitive. India’s recently concluded trade deal with Britain took three years of talks, under two different British prime ministers.

On Friday, India’s foreign ministry released a statement that put on a brave face. “India and the United States share a Comprehensive Global Strategic Partnership,” established in 2013 between President Barack Obama and the prime minister at the time, Manmohan Singh, “anchored in shared interests, democratic values and robust people-to-people ties.” The ministry stuck to principles, revealing no plan for breaking through Mr. Trump’s hard line.

“This partnership has weathered several transitions and challenges,” the statement said. “We remain focused on the substantive agenda that our two countries have committed to and are confident that the relationship will continue to move forward.”

Rebecca Elliott, Mujib Mashal and Hari Kumar contributed reporting.

Jerome H. Powell, the Fed chair, described the labor market as “solid” as recently as Wednesday, pointing to the low unemployment rate and solid job gains to justify the central bank’s decision to hold interest rates steady for the fifth consecutive meeting.

But the data on Friday called that assessment into question. The unemployment rate ticked up only slightly, to 4.2 percent. But large downward revisions to job growth in May and June suggested that the labor market has not been as strong in recent months as policymakers believed.

Fed officials have said repeatedly that their decision on whether and when to resume lowering interest rates would depend on data on both employment and inflation. On Wednesday, Mr. Powell reiterated that the Fed was prepared to act quickly if the labor market showed signs of weakening.

“Downside risks to the labor market are certainly apparent,” he said.

Not all Fed officials were prepared to wait. Two Fed governors, Christopher J. Waller and Michelle W. Bowman, dissented from the Fed’s decision this week, saying they preferred to lower rates a quarter-point. In statements released Friday, both governors cited concerns about the labor market as reasons for their dissents.

“Private-sector payroll growth is near stall speed, and other data suggest that the downside risks to the labor market have increased,” Mr. Waller wrote. He added that, with inflation still tame, “we should not wait until the labor market deteriorates before we cut the policy rate.”

President Trump also seized on the report to continue browbeating the Fed and Mr. Powell to cut. Using the nickname Mr. Trump has given Mr. Powell, the president said “Too Little, Too Late. Jerome “Too Late” Powell is a disaster. DROP THE RATE!”

Still, Mr. Trump’s own policies could make the Fed’s job more difficult. Inflation data released on Thursday suggested that tariffs have already begun to bleed through to consumer prices. And that was before the sweeping new tariffs that Mr. Trump announced on Thursday night.

Fed officials have indicated that they expect tariffs to push up consumer prices, but not to lead to faster inflation over the longer term. But they have been wary of cutting rates too soon given that they made a similar bet in the aftermath of the pandemic, which they came to regret when inflation proved more persistent than they initially expected.