President Trump said he is removing Lisa Cook, a Joe Biden-appointed Federal Reserve governor, citing allegations that Cook submitted fraudulent information on mortgage applications. Trump’s decision to remove Cook set up a clash over how much power the president has at the central bank.

On the trade front, Trump threatened late Monday to impose higher tariffs and restrict exports of chips and technology to countries that tax or regulate American tech firms. The warning raises the possibility of a fresh round of conflict with the European Union, where countries have introduced digital services taxes. 

In other tariff news, India is bracing for its tariff rate with the U.S. to climb to 50% on Wednesday. Trump also warned he could raise tariffs on China again if the country doesn’t allow rare-earth magnets to flow to the U.S. A Chinese trade negotiator heads to Washington this week.

Overseas, political uncertainty mounted in France after Prime Minister François Bayrou called for a confidence vote over fiscal policies.

President Trump’s attempt to fire Federal Reserve governor Lisa Cook is the most dramatic step yet in his effort to take control of the independent central bank and its vast authority over interest rates.

Trump has for months demanded the Federal Reserve lower rates to boost the economy, make housing more affordable, and lower the cost of servicing the national debt. He has castigated Fed Chair Jerome Powell for not moving sooner to cut them. By replacing Cook, he could add enough voices to the seven-member board of governors to potentially outvote Powell and move interest rates in his preferred direction.

“To the extent that Fed independence stands for anything, it stands for the idea that monetary policy should not be made by the whims of the sitting president,” Peter Conti-Brown, a financial and legal scholar at the University of Pennsylvania, said late Monday night. “If we allow this to become the norm, then this is the end of Federal Reserve independence as we know it.”

• Trump Says He Is Removing Fed Governor Lisa Cook

The Texas Manufacturing Outlook Survey’s index for general business activity, released Monday by the Federal Reserve Bank of Dallas, fell to minus 1.8 in August from 0.9 in July. The reading below zero suggests activity is contracting, having expanded for the first time this year in July.

Sales of new homes in the U.S. slowed, suggesting high mortgage rates are continuing to dampen demand among buyers. Sales of new single-family homes fell 0.6% to 652,000 in July from an upwardly revised 656,000 in June, according to a Commerce Department report released Monday. Sales had been expected to come in at 632,000 for the month, according to economists polled by The Wall Street Journal. Compared with July 2024, sales were 8.2% lower, the Commerce Department said. (Dow Jones Newswires)

8 a.m.: Federal Reserve Bank of Richmond President Thomas Barkin speaks before the Montgomery County Chamber of Commerce
8:30 a.m.: Advance Report on Durable Goods
9 a.m.: S&P CoreLogic Case-Shiller Indices
10 a.m.: Richmond Fed Business Activity Survey
10 a.m.: Consumer Confidence Index

11:45 a.m.: Federal Reserve Bank of Richmond President Thomas Barkin speaks before the Greensboro Chamber of Commerce
7 p.m.: U.S. tariff on India imports rises to 50%

The firing of Federal Reserve governor Lisa Cook marks a clear escalation in White House interference following President Trump's push to reshape the U.S. federal government and its agencies, says Saul Eslake, former chief economist at Merrill Lynch in Australia. Loyalty appears to be a criterion for continued employment in high public office, he adds. The independence of the Fed is a lynchpin of the safe-have status of U.S. Treasurys and the U.S. dollar. And like so many dimensions of America's brand, it is now under full-fledged assault, he says. No good can come of this, Eslake adds. — James Glynn

After Fed Chair Jerome Powell's Jackson Hole speech last week, markets and the central bank look to be on the same page about a cut in September. But the data coming before the decision will still influence the dot plot--and specifically whether it pencils in a total of 75 basis points of rate cuts before year end (i.e., a September cut plus two more), or 50 (September plus one). "We suspect that the median 2025 dot would once again imply a total of just two rate cuts by the end of this year," analysts at Wrightson write. "However, amid a 'shifting balance of risks,' it is possible that the median 2025 dot will move down to imply a cumulative rate cut of 75 basis points by year-end." — Matt Grossman

U.S. companies are likely more exposed to the impacts of tariffs than their European peers, Deutsche Bank Research analysts say. The latest U.S. producer price index increased to 0.9% in July, indicating that the U.S. tariffs are impacting companies, the analysts say. Credit investors seem to be underpricing the effects of tariffs on inflation and on the U.S. Federal Reserve interest-rate decisions, raising the risk of declines in the credit markets. "We expect margin pressure among U.S.-cyclicals to persist while high dollar-rates remain a challenge for the more highly leveraged U.S. issuer base," Deutsche Bank analysts say. — Miriam Mukuru

• A senior Chinese trade negotiator is heading to Washington this week for what is expected to be the first dialogue in the U.S. capital, according to people familiar with the matter, as both sides seek to establish regular communication during an extended tariff truce.
• The U.S. could take further stakes in companies similar to its equity investment in Intel, a top White House economic adviser said.
• Artificial intelligence is profoundly limiting some young Americans’ employment prospects, new research shows.
• French Prime Minister Francois Bayrou on Monday said he would seek parliamentary authority for his austerity plans on Sept. 8., which analysts say he is unlikely to win. (MarketWatch)

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com.