Emergency, What Emergency?

Trump used the International Emergency Economic Powers Act of 1977 (IEEPA), the first time the law had been used to apply levies to countries. This will be challenged in the courts. He did so to avoid having to seek approval for his actions, and to avoid the risk of delays resulting from legal challenges.

As the Financial Times notes, "The legal pretext for Trump’s move is questionable." "He made use of the International Emergency Economic Powers Act, an executive authority that enables him to respond to extraordinary economic or security threats. Yet that law has not previously been used to enact tariffs. The courts and Congress ought to block them." Whether they do or not, he will find it hard to justify the use of the act based on two pieces of evidence that speak for themselves:

The actions could even be dropped before the courts force him to drop them however. This week is likely to see panic on Wall Street and intensified condemnation amongst American industries. Additional concerns for jobs, about inflation and about economic growth are also likely to spook the markets and some of his own supporters and donors.

As for trust and confidence in the American markets among international trade and investment partners, the damage is likely to be long lasting and hard to repair. Reputations are always hard won and quickly lost.

Perhaps the greatest long-term damage will come form the intensification of the geo-political shifts that were already under way. There are likely to be concerted efforts to speed them up, to shift the global power balance far faster than it has been moving to date.

Readers that support Trump may view these remarks as political. They certainly are about politics, and the political impact on enterprise. But they are no party political. I am no supporter of any American political party, or the American political system which would seem to me, as an outsider, to be in urgent need of reform.