In Trump’s America, There Are No Rules, Only Access

One of the most dramatic policy reversals in U.S. economic history happened this month. In the span of just a few days, President Trump announced sweeping tariff increases, panicking global markets, and then partially backed down — all without meaningful consultation with Congress or much evidence his administration used a rational process to arrive at the numbers.

Economists, who don’t often agree on much, greeted the plan with near unanimous criticism and a fair degree of derision. Few if any political analysts could articulate a coherent rationale for why threatening to launch a trade war on most nations on earth would make strategic sense.

Yet in a way it does, because the real story may not be about trade. Looked at in a different way, it’s about power.

In principle, it is not up to the president to decide unilaterally whether to impose tariffs, or on which countries to impose them. The Commerce Clause of the U.S. Constitution clearly vests this authority in Congress. However, Mr. Trump made use of his powers to restrict trade under the International Emergency Economic Powers Act, which allows the president to regulate trade during economic emergencies. The president effectively declared that the executive branch could bypass Congress’s constitutional authority.

Financial markets seemed to grasp this. Unlike past global crises, this episode did not send investors fleeing into the dollar’s safety. Quite the opposite: The dollar dropped sharply when the tariffs were announced and continued to fall even after the administration reversed course. This suggests that investors are anxious about much more than just the economic damage from protectionist policies. They’re worried about the United States no longer being a safe place to hold their assets. They have good reason to be concerned.