The Latest: Fed governor to sue Trump, saying he can't legally fire her

Financial markets worldwide have been rattled by President Donald Trump's announcement that he's firing Federal Reserve Governor Lisa Cook, an unprecedented move and sharp escalation in his effort to exert greater control over what has long been considered an institution independent from day-to-day politics.

But Cook said she's not leaving, and her lawyer said Tuesday that she'll sue to keep her job. “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” Cook said in an emailed statement. “I will not resign.”

Trump said in a letter posted on his Truth Social platform that he is removing Cook effective immediately because of allegations by one of his supporters that she committed mortgage fraud. Market reaction was swiftly negative — economists have long preferred independent central banks because they can more easily take unpopular steps to fight inflation and ensure the economic stability that is key to business confidence.

The Latest:

Federal Reserve’s Cook will sue the Trump administration to keep her job

Fed governor Lisa Cook’s lawyer, Abbe Lowell, said Trump “has no authority to remove Federal Reserve Governor Lisa Cook.”

“His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis,” Lowell added. “We will be filing a lawsuit challenging this illegal action.”

Trump said late Monday that he would fire Cook after a supporter of his alleged she committed mortgage fraud in 2021, before she was appointed to the Fed.

Americans’ view on the US economy declined in August as anxiety over jobs grows

It’s the eighth straight month of growing anxiety over a weakening job market.

The Conference Board said Tuesday that its consumer confidence index ticked down by 1.3 points to 97.4 in August, down from July’s 98.7. A measure of short-term expectations for their income, business conditions and the job market fell by 1.2 points to 74.8, remaining significantly below 80, the marker that can signal a recession ahead. And consumers’ assessments of their current economic situation also fell modestly, to 131.2 in August from 132.8 in July.

While the unemployment and layoffs remain historically low, there has been noticeable deterioration in the labor market and mounting evidence that people are having difficulty finding jobs.

▶ Read more about declining American consumer confidence

Sticker shock looms for consumers of cheap imports

U.S. consumers have gotten used to shopping the world without paying customs duties on the international packages they receive from big e-commerce companies like Shein and Temu, specialty shops and businesses that sell goods through online marketplaces like Amazon, Etsy and eBay. That era is about to end.

Low-value imports are losing their duty-free status in the United States as Trump seeks to make the nation less dependent on foreign goods and reset global trade with tariffs. His executive order eliminates the widely used “de minimis” customs exemption for international shipments worth $800 or less starting Friday, nearly two years earlier than the deadline set in his tax and spending law. Such shipments could be charged up to 50% of their declared value or, for the next six months, up to $200 per parcel.

“Consumers are going to be shocked,” Alison Layfield, a vice president at ePost Global.

▶ Here are some factors to keep in mind when shopping online to avoid a surprise customs bill.

Wisconsin is next on VP’s swing-state tour to promote Trump’s tax cut and spending law

Vice President JD Vance is set to touch down in La Crosse, in the western part of the state, on Thursday to talk about the law at a steel fabrication facility.

Vance has already visited the swing states of Georgia, Pennsylvania and Ohio, his home state, to discuss the One Big Beautiful Bill Act.

‘A user’s guide on how to lie’

Two key documents from the Trump administration aimed at revoking the long-standing finding that climate change is dangerous were filled with errors, bias and distortions, according to dozens of scientists surveyed by The Associated Press.

One argues that sea ice decline in the Arctic has been small, citing data from the Antarctic. Data presented on climate-related crop losses and wildfires were misapplied or unreliable. Scientists noted basic errors, but the most common critique from the vast majority of the 64 who answered AP’s questions was that the Environmental Protection Agency and the Department of Energy ignored, twisted or cherry-picked information to manufacture doubt about the severity and threat of climate change.

“It is almost a user’s guide on how to lie with figures,” said Jennifer Marlon, director of data science at the Yale Program on Climate Change Communication.

Melania Trump announces nationwide AI contest for students

The goal is to help students get comfortable with artificial intelligence tools and to work together using them to solve community issues.

The first lady announced the Presidential AI Challenge in a short video. Students in grades K-12 can sign up starting Tuesday at AI.gov.

An adult or teacher must sponsor a team. Submissions are due by the end of December. Regional competitions will be held in the spring, followed by a White House event with the national winners.

The contest was called for under an executive order Trump signed in April.

GOP congressman says redistricting is a ‘viable way’ to stop Trump impeachment

Missouri Rep. Mark Alford says mid-decade redistricting has “really kind of opened the avenue for this to be a viable way to gain seats.”

Speaking after a town hall meeting in Bolivar, Missouri, Monday, the two-term Republican said he didn’t want to comment on the Trump-backed initiative to redraw Missouri’s boundaries.

But then he said: “We are looking to retain every seat we can, and grow our majority. Because if we don’t, come Jan. 3, 2027, everything will be about the impeachment of President Donald J. Trump and I don’t want to see that again.”

Black leaders call Trump’s firing of Cook ‘racist, misogynistic, and unlawful’

House Democratic Leader Hakeem Jeffries noted that Lisa Cook is “the first Black woman ever to serve on the Federal Reserve Board of Governors.”

“Donald Trump is trying to remove her without a shred of credible evidence that she has done anything wrong,” Jeffries said.

The Congressional Black Caucus also condemned Trump’s unprecedented actions: “In the 111-year history of the Federal Reserve, no president has ever attempted to remove a governor of the central bank until now.”

“Let’s be clear: this is a racist, misogynistic, and unlawful attack on the integrity and independence of the Federal Reserve,” the caucus said in a statement.

Wall Street steadies, global markets sink on Trump effort to control Federal Reserve

Wall Street has recovered some overnight losses in response to Trump’s announcement that he’s firing Federal Reserve Governor Lisa Cook.

Futures for the Nasdaq, Dow Jones Industrial Average and S&P 500 swung notably lower and most markets overseas declined significantly after Trump announced he’s firing Federal Reserve Governor Lisa Cook. They recovered some overnight losses after Cook responded by refusing to leave and hiring a lawyer to prevent what she called an illegal action.

“Trump’s decision to remove a sitting Fed governor has shaken confidence in the institution that underpins the world’s financial system,” Nigel Green of the financial advisory deVere Group, said in a commentary.

Fed Governor Lisa Cook hires prominent lawyer

Trump’s effort to fire Federal Reserve Governor Lisa Cook is likely to touch off an extensive legal battle that will probably go to the Supreme Court and could disrupt financial markets. Stock futures declined slightly late Monday, as did the dollar against other major currencies.

Cook has retained Abbe Lowell, a prominent Washington attorney. Lowell said Trump’s “reflex to bully is flawed and his demands lack any proper process, basis or legal authority,” adding, “We will take whatever actions are needed to prevent his attempted illegal action.”

If Trump succeeds, it could erode the political independence considered critical to the central bank’s ability to ensure economic stability. And if bond investors start to lose faith that the Fed can control inflation, they will demand higher rates, pushing up borrowing costs for mortgages, car loans and business loans.

World shares sink after Trump escalates central bank feud

Following Trump’s Monday night announcement that he would be firing Cook, Germany’s DAX lost 0.5% to 24,148.16, while the CAC 40 in Paris slumped 1.6% to 7,716.55. Britain’s FTSE 100 gave up 0.6% to 9,269.40. The futures for the S&P 500 and the Dow Jones Industrial Average were 0.1% lower. In Asian trading, most benchmarks declined.

Democrats demand Trump resume a major offshore wind project

A nearly complete wind farm off the coast of Rhode Island and Connecticut faces an uncertain future after the Trump administration abruptly halted construction. The states’ Democratic governors, lawmakers and union workers called Monday for the president to reverse course.

Judge rules Utah’s congressional map must be redrawn for the 2026 elections

The Utah Legislature will need to rapidly redraw the state’s congressional boundaries after a judge ruled Monday that the Republican-controlled body circumvented safeguards put in place by voters to ensure districts aren’t drawn to favor any party.

What to know about cashless bail after Trump’s executive order

Trump's executive order Monday threatens to withhold or revoke federal funding to local and state governments that offer cashless bail, arguing that it is a threat to public safety.

“No cash. Come back in a couple of months, we’ll give you a trial. You never see the person again,” he said, moments before signing the order.

The order directs Attorney General Pam Bondi to submit a list of jurisdictions that have “substantially eliminated cash bail as a potential condition of pretrial release from custody for crimes that pose a clear threat to public safety and order” within 30 days.

Opponents of cash bail describe it as a penalty on poverty. They say the wealthy can pay their way out of jail to await trial while those with fewer financial resources have to sit it out behind bars. Supporters have argued that bail is a time-honored way to ensure defendants who are released from jail show up for court proceedings. And they warn that violent criminals can commit other crimes while released pending trial.

Trump moves to ban flag burning despite Supreme Court ruling that Constitution allows it

Trump Monday signed an executive order requiring the Justice Department to investigate and prosecute people for burning the American flag, an activity that the U.S. Supreme Court has ruled is legitimate political expression protected by the U.S. Constitution.

The order the Republican president signed in the Oval Office acknowledged the court’s 5-4 ruling in a case from Texas in 1989, but said there is still room to prosecute flag burning if it “is likely to incite imminent lawless action” or amounts to “fighting words.”

“You burn a flag, you get one year in jail. You don’t get 10 years, you don’t get one month,” Trump said. “You get one year in jail, and it goes on your record, and you will see flag burning stopping immediately.”

The order also called for Attorney General Pam Bondi to pursue litigation to challenge the 1989 ruling, aiming to return the issue to the Supreme Court, which today is much more conservative than the makeup of the court in 1989 and includes three judges Trump appointed.

▶ Read more about the executive order

Why the Federal Reserve has historically been independent of the White House

The Fed wields extensive power over the U.S. economy. By cutting the short-term interest rate it controls — which it typically does when the economy falters — the Fed can make borrowing cheaper and encourage more spending, accelerating growth and hiring. When it raises the rate — which it does to cool the economy and combat inflation — it can weaken the economy and cause job losses.

Economists have long preferred independent central banks because they can more easily take unpopular steps to fight inflation, such as raise interest rates, which makes borrowing to buy a home, car, or appliance more expensive.

The importance of an independent Fed was cemented for most economists after the extended inflation spike of the 1970s and early 1980s. Former Fed Chair Arthur Burns has been widely blamed for allowing the painful inflation of that era to accelerate by succumbing to pressure from President Richard Nixon to keep rates low heading into the 1972 election. Nixon feared higher rates would cost him the election, which he won in a landslide.