Trump Used 'Emergency Powers' to Impose His Tariffs. Should We be Concerned?
Mike Whitney

Trump did not fully usurp dictatorial powers to impose his tariffs…. However, his actions, particularly his use of the International Emergency Economic Powers Act (IEEPA) and other emergency powers, have raised significant concerns among critics, legal scholars, and some members of Congress that he is pushing the boundaries of executive authority in ways that could be seen as authoritarian or dictatorial. Grok

Meet The New Boss, Same as the Old Boss

We just learned that the world’s most powerful person, Donald Trump, has a boss: the bond market.
He may not have acknowledged this to himself, but the global financial tumult he caused…. has locked him in a fiscal prison. ….He is totally in hock to the goodwill of bonds investors….

He has also handed a loaded gun to his perceived enemy, China, and his supposed ally Japan…. The loaded guns they have are the… more than a trillion dollars of US Treasuries and China not much less. If they were to sell those bonds, or even if they chose not to refinance maturing bonds, that could be a disaster for Trump. Because it could cause another potentially crippling spike in bond yields.

Here is the measure of Trump’s debacle. He may well have trashed America’s single most important financial competitive advantage, namely that investors have traditionally bought the dollar and US Treasuries at a time of economic and political uncertainty. No more – because he personally has become the world’s source of economic uncertainty and anxiety. So, as I say he is now in a fiscal prison. And if bond investors, including Japan and China, see him imposing tariffs or cutting taxes in ways they don’t like,… they have the means and power to stop him. Robert Peston@Peston

Why have the markets responded so erratically to Trump’s “Liberation Day” announcement?

Investors don’t like uncertainty. Uncertainty breeds fear, fear breeds panic, and panic breeds crashing markets. Trump’s sudden imposition of sweeping tariffs triggered the fear that fundamental changes in global trade would produce higher inflation, slower growth, disrupted supplylines, and escalating conflict with America’s trading partners. These are the anticipated outcomes that put investors on edge and sent markets plunging.

Trump has tried to allay investor fears by presenting his tariffs as an essential part of his “America First” policy. He is trying to convince his supporters that these new duties will “liberate” working Americans from what-Trump-calls “unfair trade practices.” (In a speech “he compared the tariffs to a declaration of economic independence drawing parallels to other historic US milestones.”)

What can we extrapolate from this?

First of all, that (in Trump’s mind) the United States has been the victim of abusive treatment by allies and rivals alike. As Trump put it: “They are ripping us off”. This is the basic mindset that energizes Trump’s “Liberation Day” philosophy, a philosophy that the rest of the world should be punished for America’s deficit-generating over-consumption and its $36 trillion ocean of red ink. That is everyone else’s fault, not ours. And mainly it is China’s fault because China opened its country to the voracious American corporations who moved their industries to take advantage of China’s cheap labor. According to Trump, China should be blamed for that as well.

The problem with “America First” economic policy, is that other countries are going to defend their own economic interests, too. So, if someone like Trump tries to arbitrarily scrap the current system of international trade and impose his own version, he’s going to encounter stiff opposition. (which he has.)

Even so, Trump’s announcement has had a calamitous effect on the global financial system triggering a convulsive flight from US Treasuries. This, in turn, has prompted many analysts to speculate that Trump’s trade war will fundamentally change the manner in which international trade is conducted. That, of course, has set off more alarms while ratchetting up investor anxiety to new highs. Singapore Foreign Minister Vivian Balakrishhnan summed it up like this:

This is the end of an era… The architect, the master planner, the developer of the rules-based system of economic integration has decided that it now needs to engage in a full-scale demolition of the same system that it created.

He’s right, isn’t he? The era of integrated markets in a globalized system is over. The world is being redivided into warring blocs by an administration that believes that the country that borrows and consumes more than any other country in the history of mankind is being unfairly exploited by low paid workers around the planet. The idea is laughable.

To fully grasp the extent to which Trump’s underlying theory depends on the belief that “They are ripping us off”, we’ve excerpted this short clip from a post by Arnaud Bertrand commenting on a speech by Trump’s Chair of the Council of Economic Advisers, Steve Miran:

The gist of Miran’s argument is to reposition the global reserve currency status of the dollar not as an exorbitant privilege… but as somehow a “burden” that the rest of the world needs to compensate the US for bearing. As Miran explains it, having the dollar as a reserve currency “has caused persistent currency distortions and contributed, along with other countries’ unfair barriers to trade, to unsustainable trade deficits” which “have decimated our manufacturing sector.”

So, he wants to give up the reserve currency status of the dollar, right? Wrong. He wants to have it both ways. He says that America’s “financial dominance cannot be taken for granted; and the Trump Administration is determined to preserve [it]” but this same financial dominance “comes at a cost” and “other nations” need to pay for it….

Let’s pause a moment here to contemplate the sheer insanity of this:the U.S. is literally suggesting that countries should mail checks to the US Treasury as tribute for the ‘privilege’ of maintaining the dollar as a global reserve currency, when it is this very reserve status of the dollar that is the cornerstone of US power. Arnaud Bertrand

WTF? So, Miran thinks that overconsumption and deficit-spending is so indispensable to the global economic system, that other countries should pay the US to continue its shameless freeloading?

Indeed, that is his position. And the belief is not limited to Miran either. In fact, this is the ideological cornerstone upon which Trump’s trade philosophy rests. ‘We will spend; you will pay. We will take; you will give. We will rule, you will follow.” Get the picture?

Oh—and just to add insult to injury—we also regard ourselves as the ‘victim’ in this relationship. (“They’re ripping us off.”) It boggles the mind.

Trump’s whole scattershot approach to international trade speaks to this unbounded arrogance. And that appears to be the driving force behind “Liberation Day”, the immutable belief that the rest of the world exists only to serve US interests. Am I wrong?

I am not wrong. Just look at the markets. Investors are voting with their feet. They’re headed for the exits. Their panic is a referendum on Trump’s trade policies. This is not a “financial crisis”. This is a “tariff-induced run on US risk assets” that is attributable to one man alone: Donald Trump. No one else caused this.

Trump’s signature economic program (reciprocal tariffs) is based on the wrongheaded view that the rest of the world is supposed to function as America’s personal ATM. But investors don’t ascribe to this belief; they think the tariffs are going to trigger a firesale of US financial assets and crash the market. And that’s what the plummeting Treasuries market is telling us, too. This is from an article at Politico:

The sharp sell-off in government debt securities that underpin the global financial system pushed President Donald Trump to pause for 90 days his plans to slap punishing tariffs on dozens of trading partners….

Investors often treat government bonds as a haven during times of market stress. Now, the opposite has occurred. Hedge funds and other investors have dumped Treasury securities even as stocks plunged, pushing up yields that are used to benchmark everything from mortgage rates to corporate loans.

The 90-day pause has done little to quell the market’s fears. …. If trade policy uncertainty continues to rattle bond investors and drives up borrowing costs, it would saddle Trump with a lethal mix of high interest rates, elevated inflation and slow or even negative economic growth….

There’s little clarity right now on the extent to which bond market jitters are driven by general market turmoil — some investors are selling Treasuries because they need cash — or whether it might signal something more ominous, such as less confidence in U.S. assets as Trump upends the global economic order…. The fact that the dollar and Treasury bonds are sinking even as stocks crater reflects broader questions about “who is going to finance continuous deficits. Where is the capital going to come from to support U.S. assets in general?” Bond market motion sickness in Trump’s economy, Politico

The situation is dire which is why Trump threw in the towel and lifted the tariffs on 90 countries excluding China. His plan to use tariffs as a means of inflicting pain on trading partners was derailed by an unexpected flight from US debt that he never saw that coming.

The incident speaks to the supreme importance of US Treasuries in the global system. The $28 trillion Treasuries market—which is the most liquid and well-capitalized market in the world—plays a special role in the global economy.  The yields on the 10-year and 2-year notes, serve as a benchmark for pricing other financial instruments worldwide, including corporate bonds, mortgages, and loans. When Treasury yields rise or fall, they influence borrowing costs globally. In other words, U.S. Treasury yields “set the tone for global monetary conditions”, and when the market becomes volatile—as it has following Trump’s tariffs fiasco—everything goes haywire.

It’s no overstatement to say the US Treasuries market is the cornerstone upon which western-style Capitalism rests and any cracks that appear in that foundation are likely to have catastrophic impact on the world economy. That is why Trump gave-way quickly and eased the policy on everyone but China.

As for China, the country is now effectively under a US embargo that has been imposed willy-nilly without congressional approval and in clear violation of WTO rules. Here’s a short blurb from Grok:

The WTO sets out a framework for international trade (which includes) the prohibition of arbitrary or unjustifiable trade barriers… (tariffs) cannot be used to discriminate unfairly between trading partners. Trump’s tariffs violate WTO rules… as they appear to breach MFN, non-discrimination, and tariff-binding commitments without clear justification under WTO exceptions. (The Tariffs also) lack sufficient justification under national security exceptions and are seen as discriminatory and protectionist. (Grok)

It’s also worth noting that the countries that Trump has imposed tariffs on are being asked to align with U.S. national security goals. This is an issue that the media has failed to cover in any detail, but the implication is that the administration is using economic coercion to enlist an anti-China coalition that will join the United States in its efforts to sanction, isolate and encircle the PRC. 

Also, “Trump has invoked the International Emergency Economic Powers Act (IEEPA) to justify his tariffs, including those announced as part of his “Liberation Day” policy and earlier actions. According to Grok:

A White House fact sheet from April 2, 2025, states that Trump declared a national emergency due to “foreign trade and economic practices” creating a threat to U.S. national and economic security, and it mentions using the IEEPA to impose “responsive tariffs” to address this emergency….

The IEEPA, enacted in 1977, allows the president to declare a national emergency in response to an “unusual and extraordinary threat” to national security, foreign policy, or the economy that originates outside the U.S. Once declared, the president can block transactions, regulate imports/exports, and take other economic measures….

….Conclusion

Yes, Trump has invoked the IEEPA to justify his tariffs, including those from the Liberation Day announcement on April 2, 2025, and earlier actions in February 2025. He declared national emergencies under the IEEPA to impose both the baseline 10% tariff on all imports and the higher reciprocal tariffs, framing trade deficits and related issues as threats to U.S. economic and national security. (Grok)

Question—Has Trump used the International Emergency Economic Powers Act (IEEPA) to avoid getting congressional approval for his trade policy?

Yes, Trump has used the International Emergency Economic Powers Act (IEEPA) to avoid the need for congressional approval for his tariffs, including the Liberation Day tariffs and earlier 2025 actions. By declaring national emergencies related to trade deficits, drug trafficking, and migration, he claims unilateral authority under IEEPA to impose tariffs without legislative consent, exploiting the law’s broad emergency powers

Question—Does Congress have the legal authority to oversee the imposition of tariffs?

Yes, Congress has the legal right to oversee the imposition of tariffs under the Constitution and federal law (Article I, Section 8), as it holds the ultimate authority to regulate foreign commerce and impose duties. However, Trump’s use of IEEPA to declare national emergencies allows him to bypass this oversight temporarily, relying on broad executive powers that don’t require congressional approval.

Last question for Grok: What do we call a political leader who usurps Congress’s legitimate constitutional authority and accrues all state power to himself?

A political leader who usurps Congress’s legitimate constitutional authority and accrues all state power to himself is most commonly called an autocrat, dictator, or tyrant in extreme cases…. For Trump specifically, the labels depend on perspective: critics see his IEEPA use as authoritarian, while supporters see it as bold leadership.

I blame Congress as much as Trump but—however you look at it—we’re in uncharted waters.

 

 

 

Mike Whitney writes on politics and finances and lives in Washington state. He can be reached at fergiewhitney@msn.com

  

 

   

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