The Roundup – September 2025
Presidential Overreach?
There were two key developments out of the US over the course of the month, the first, the legality of the tariffs implemented since the President’s return to the White House. The second, the independence of the Federal Reserve which came under fire when Trump tried to dismiss an interest-rate voting Governor. Both events have impacts beyond US borders.
A verdict from the US Court of Appeals deemed most of the tariffs imposed by President Trump as illegal, including the initial round of duties against Canada, Mexico and China, as well as the Liberation Day tariffs. As expected, the Administration contested the ruling, setting the stage for the Supreme Court to review the case in early November.
Meanwhile Washington has introduced further tariffs on sector-specific imports, including semiconductors and pharmaceuticals. The more targeted nature of these duties, and the supporting review means they are less likely to be caught up in the same litigation as the sweeping and broad-based levies, which have been viewed as an overreach of power.
An unwinding of the broader tariffs would be a blow to the US President, who has shaped his foreign policy around them, and which have generated $165 billion in revenue so far - which if overturned, may need to be refunded. In preparation, the Administration are investigating alternate avenues to reimpose the import taxes, if deemed unlawful.
Despite US trade policy upending trade partnerships, global growth has so far held up. The OECD notes this is partially due to tech investment buoying activity in the US and fiscal support softening China’s slowdown. While inventory buffers and smaller margins have also helped reduce the impact, these are waning, meaning the full force of tariffs is yet to be felt.
The month also saw President Trump announce he was firing Fed Governor, Lisa Cook - an unprecedented move given the Banks design to function independently of political influence. However, a judge temporarily blocked the dismissal leaving Cook free to undertake her duties, including voting on interest rates at the Fed’s September meeting.
In another first, the President’s Chief Economic Adviser, Stephen Miran, took a leave of absence from the White House to fill a vacant Governor’s seat at the Federal Reserve. Miran was sworn in only hours before the start of the Bank’s September meeting, enabling him to participate in the vote on interest rates, further raising concerns around Trumps reach.
Central Bank leaders including the BoE’s Andrew Bailey, and the ECB’s Christine Lagarde have voiced their concerns about the threat on the US Federal Reserve’s independence. The subsequent damage to the world’s largest economy would, by extension push up international borrowing costs and risk disrupting the entire global financial system.
The Fed voted to decrease interest rates (-0.25%) from 4.5%, a level unchanged since December 2024, following a cautious response to the uncertainty of policy impacts. With recent employment numbers softening, the balance of risks to the Fed’s dual mandate supported the downsize. Miran was the only Governor to dissent in favour of a 0.5% cut.
Välkomna, Dr Breman!
On 1st December Swedish economist, Dr Anna Breman, will become the first female, non-New Zealander, to head up the Reserve Bank of New Zealand. Against the backdrop of a struggling domestic economy, markets anticipate 0.5% or more worth of interest cuts this year, with Governor Breman’s influence on the OCR not until the February 2026 meeting.