These Tariffs Are a Democratic Crisis, Not Just an Economic One
The Founders wouldn’t look kindly on “Liberation Day.”
America—a country founded in defiance of arbitrary economic control—is now imposing it on its own people and its allies.
In a Rose Garden announcement on Wednesday, President Trump proudly displayed his “Reciprocal Tariffs” chart, imposing a baseline 10% tariff on imports from every country—allies and adversaries alike—with rates ranging up to 50%. To make this happen, Trump invoked the International Emergency Economic Powers Act, declaring a “national economic emergency.”
This new tariff regime hits almost every imaginable product, from electronics and machinery to apparel and agriculture, sparing only a few strategic imports like certain metals, semiconductors, and energy resources. The president claims these “reciprocal tariffs” will counter foreign protectionism and fix “unfair” trade deficits that have “hollowed out” U.S. manufacturing. In reality, the tariffs were set by a crude formula tied to bilateral trade gaps, not actual tariffs being imposed by foreign countries—math that one analyst called “nonsensical … with zero relationship to real policies.”
As an economist, I feel professionally obligated to point out that there is nothing inherently bad about trade deficits. Americans run deficits with some countries and surpluses with others as a natural result of consumer choice and comparative advantage, not because of nefarious foreign barriers.
Again, as an economist, I care a great deal about trade—not as an abstraction, but as a mechanism of opportunity. Since the end of World War II, freer trade has catalyzed the greatest reduction of poverty in human history. In America and around the globe, wherever leaders have embraced markets, economic liberalization has raised life expectancy, lowered infant mortality, and created pathways to prosperity. No economic policy in the modern era has done more to improve the condition of humanity than the deliberate opening of markets, not through conquest, but through peaceful cooperation and voluntary exchange.
That’s why I’m baffled by the idea that tariffs are a pathway to renewal. Already, the economic fallout of this tariff spree has been immediate and alarming. As I write, the numbers continue to plummet. The Dow Jones Industrial Average has dropped over 2,000 points in the past two days alone. The S&P 500 and the Nasdaq are down 6%. That’s a loss of $5 trillion in a blink of an eye. (Thinking about retiring soon? You might want to postpone your plans.)
None of this is surprising. It’s what every B+ student in an international trade course would have predicted. When you tax a value-creating activity—like trade born of comparative advantage—you will see less of it. That’s why investors are fleeing.
And what comes next will be worse. American consumers will bear the brunt through higher prices on countless everyday goods. In effect, this is a massive tax hike on U.S. families. The promise, according to the administration, is that in the long run, global investors will move their operations back to U.S. shores. Don’t bet on it. As I argued in a recent Persuasion article, the arbitrariness of the administration’s actions is generating deep uncertainty that will have investors sitting on the sidelines of the economy until something like normality returns.
But as worried as I am about the economic impact of a global trade war, I’m even more concerned about what this means for our constitutional democracy. The president’s tariff regime isn’t just economically harmful—it reverses the moral and political logic that made trade a foundation of the American experiment.
In direct contrast to monopolistic controls of Old World mercantilism, Founding-era thinkers saw the free movement of goods, services, and people across borders as a vital expression of liberty and American sovereignty.
That belief is woven into the Declaration of Independence itself. It enumerates 27 grievances against the Crown, many of them aimed at arbitrary economic power and executive overreach. Among the “long train of abuses and usurpations” were the imposition of taxes “without our Consent,” and the King’s manipulation of crises to consolidate power. Most strikingly, the authors of American independence decried the King and Parliament (in which they had no representation) for “cutting off our Trade with all parts of the world.”
Likewise, in Federalist No. 47, James Madison warned that “the accumulation of all powers, legislative, executive, and judiciary, in the same hands … may justly be pronounced the very definition of tyranny.” The Founders were not only concerned with monarchy in name—they feared monarchy in function. At the Constitutional Convention, some worried that the presidency would become “the foetus of monarchy.” That’s why the Constitution sought to guard against precisely this kind of concentration of power. It vests the authority to “regulate commerce with foreign nations” in Congress, not the executive.
President Trump’s use of emergency powers to impose tariffs bypasses that structure entirely. And it not only violates the Constitution—it also breaks the statutory law being invoked. The Emergency Economic Powers Act, enacted in 1977, is constitutionally problematic in its delegation of power to the president, but even on its own terms, it requires a genuine “unusual and extraordinary threat” before the president can wield unilateral power over commerce with foreign nations. Despite Trump’s claims to the contrary, America is experiencing no such threat.
This isn’t just a policy debate: it’s a break from our constitutional law and the basics of the American tradition. The Founders understood that liberty requires lawful process, and that the power to tax or restrict trade must never rest in the hands of a single individual. When a president can trigger a trade war with Canada, Mexico, or the European Union—without a vote, without a hearing, without even a rational basis for the rates imposed—it’s not merely a trade problem. It’s a crisis of consent.
In his revolutionary pamphlet Common Sense, Thomas Paine presented a vision of a republic that would engage the world through free exchange rather than imperial encroachment. “Our plan is commerce,” he wrote, “and that, well attended to, will secure us the peace and friendship of all Europe.” For Paine, trade was a force for peace, not conquest. It was the economic expression of republican virtue.
That vision has faded from memory. If we truly want to lead the free world, we must again act like a free people governed by the rule of law, not proclamation. That means restoring Congress to its constitutional role in trade policy. It means rejecting the false promise of protectionism-by-fiat. And it means remembering what the authors of the American republic understood: liberty and the freedom to trade are inseparable, and the prosperity they bring are among freedom’s greatest gifts.
Emily Chamlee-Wright is the president and CEO of the Institute for Humane Studies.
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The problem with Emergency Economic Powers Act of 1977 and similar "emergency" delegations is that, although they "require a genuine 'unusual and extraordinary threat', they delegate power without providing Congress with a kill switch if a President lies.
Joe Biden and the Democratic Congress could have fixed this in 2021 and 2022 but they didn't, even though they KNEW that a returning Trump or someone similar would abuse it. How did they know? Because he ALREADY HAD, to illegally divert appropriated funds to build his Wall, even after Congress refused to fund it.
So, why didn't they? Because the dirty little secret is that NO Administration of either party wants to return power to Congress once they have it, because they can't imagine that their side would abuse it, just the other guys. The United States and the world will now pay for that failure of imagination. If there's ever a second chance to fix this, I hope they've finally learned.
"As an economist, I feel professionally obligated to point out that there is nothing inherently bad about trade deficits."
Well with all due respect, either you are not a very good economist, or you are an intellectually dishonest one that is working to influence regime politics.
While the US pushed global economic policy, the rest of the world exploited it accessing the rich American consumer markets while implementing nationalist industrial policy. Trade deficits are fine where there is an imbalance of raw materials or capability... neither exist with the US. The trade balance has been for cheaper labor only, and that has decimated large swaths of the country... and you either don't know about them, or more likely don't care about them in your upper class coastal liberal enclave.
It is well past time for the US to stop giving away all its industry, manufacturing and working class jobs to keep enriching the upper class. The top 10% have had it good, but it was never sustainable. It is time for the US to implement its own national industrial policy. Foreign companies that want to sell their products to American consumers can make those products here in the US.
Once the trade deficit gets back to parity, the US can lower tariffs as makes sense.