By Michael O’Neill

The first Monday in September has been celebrated as Labor Day since the Central Labor Union in New York City organized a parade and a picnic, back in 1882. The idea spread across the country and two years later, President Grover Cleveland made it a national holiday.

Today, there is rumored to be a movement afoot in Washington, D.C., that claims White House insiders are quietly lobbying to have the first Monday in September holiday renamed Trump’s Tremendous Economic Triumph Day. It would honor the 47th President for his tireless efforts in using tariffs to terraform the global economic landscape—efforts to “Make America Great Again.”

Of course, none of the above is true—but it is not out of the realm of possibility. Last Labor Day, how many of you believed that in 2025 Americans would be stopped, detained, and deported for looking Latino? Who thought that Immigration Customs Enforcement (ICE) officers would become the Oval Office Enforcement Division? Of course, deploying armed National Guard troops on Washington streets as “crime fighters” wasn’t even on anyone’s radar screen. And if you think those moves stretched the limits of presidential power, Trump is even more aggressive as he works to bend the Federal Reserve to his will.

When the Rule Book Bites Back

President Trump’s threats to fire Fed Chair Jerome Powell were dismissed as fiction. The law made it so. The Federal Reserve Act of 1913 states that a president can only remove a Fed governor, including the Chair, “for cause,” which has been interpreted by the Supreme Court to mean “inefficiency, neglect of duty, or malfeasance in office.”

In 1933, Franklin D. Roosevelt attempted to fire William E. Humphrey, a Federal Trade Commission (FTC) commissioner, because he was a holdover from the Hoover administration and didn’t align with FDR’s New Deal vibe. Humphrey refused and FDR fired him, claiming the president had unchecked removal power. Although Humphrey died shortly after, his estate sued, saying the termination was illegal, and the Supreme Court agreed, in a 9-0 ruling. The Court said that presidents cannot fire commissioners of independent agencies like the FTC for reasons like policy disagreements or political misalignment.

Those Judges Never Met Donald J. Trump.

Trump is fuming at Jerome Powell, the very man he pushed into the Fed chair. He expects loyalty and gratitude; Powell thinks his only loyalty is to the Fed’s mandate—keeping inflation in check and people employed.

To Trump, that means Powell has to go—Supreme Court be damned. He fired a barrage of insults, slurs, and lawsuits aimed at Powell, and that is just the opening act. They are meant to grind down Powell’s credibility, as is the threatened lawsuit about huge cost overruns for renovations to the Fed headquarters.

He is overtly stacking the Fed with loyalists like Stephen Miran, considered the architect of Trump’s tariff strategy. He just “fired” Lisa Cook—she refuses to leave, but Trump vows to drag it through the courts—and he’s dangling Powell’s May chair vacancy like bait to lure Governors Michelle Bowman and Christopher Waller into line. The endgame couldn’t be plainer: intimidate the Board, neuter Powell, and recast the Fed from an independent central bank into another division of Trump’s cabinet.

The Market’s Dilemma

For bond and currency traders, the legal wrangling isn’t academic. It’s about whether the FOMC is free to fight inflation or whether it becomes an arm of the White House. Trump has made no secret of what he wants: lower rates, a cheaper dollar, and looser policy to juice growth heading into 2026.

At the very least, traders know that U.S. interest rates will be sharply lower by May 2026 and will be managing their portfolios with that in mind.

But the long-term impact could be nasty. One of the reasons that the U.S. dollar enjoys its status as a reserve currency is because monetary policy is independent of politics. If Trump is successful in politicizing the Fed it could inadvertently drive U.S. borrowing costs higher. That’s because Treasury investors may demand a higher risk premium to hold U.S. debt, since inflation could run hotter without an independent Fed.

Loonie Rises on Trump Fed

If Trump controls the Fed and slashes interest rates, initially stocks will soar, global risk sentiment will rise, and it will boost the Canadian dollar by default—at least in the short term. It won’t last as Trump tariffs, reduced investment and rising unemployment leave the domestic economy flirting with a recession. But until then, the Loonie will happily march in Trump’s Tremendous Economic Triumph Day parade.