Founders and economic democracy<\/p>\n
In many ways, the U.S. founders were supporters of economic democracy. That\u2019s why, in the U.S. Constitution, they gave tariff- and tax-making powers<\/a> exclusively to Congress.<\/p>\n And for good reason. Taxes can often represent a flash point between a government and its people<\/a>. Therefore, it was deemed necessary to give this responsibility to the branch most closely tied to rule of, and by, the governed: an elected Congress. Through this arrangement, the legitimacy of tariffs and taxes would be based on voters\u2019 approval \u2013 if the people weren\u2019t happy, they could act through the ballot box.<\/p>\n To be fair, the president isn\u2019t powerless over trade: Several times over the past century<\/a>, Congress has passed laws delegating tariff-making authority to the executive branch on an emergency basis. These laws gave the president more trade power but subject to specific constitutional checks and balances.<\/p>\n The stakes for economic democracy<\/p>\n At issue before the Supreme Court now is Trump\u2019s interpretation of one such emergency measure, the International Emergency Economic Powers Act<\/a> of 1977.<\/p>\n Back in April 2025, Trump interpreted the law<\/a> \u2013 which gives the president powers to respond to \u201cany unusual and extraordinary threat\u201d \u2013 to allow him to impose tariffs of any amount on products from nearly every country in the world.<\/p>\n Yet the act does not include any checks and balances on the president\u2019s powers to use tariffs and does not even mention tariffs among its remedies. Trump\u2019s unrestrained use of tariffs in this way was unprecedented<\/a> in any emergency action ever taken by a U.S. president<\/a>.<\/p>\n Setting aside the constitutional and legal issues, the move raises several concerns for economic democracy. <\/p>\n The first danger is in regards to a concentration of power. One of the reason tariffs are subjected to congressional debate and voting is that it provides a transparent process that balances competing interests. It prevents the interests of a single individual \u2013 such as a president who might substitute his own interests for that of the wider public interest \u2013 from controlling complete power. <\/p>\n Instead it subjects any proposed tariffs to the open competition of ideas among elected politicians. <\/p>\n Compare this to the way Trump\u2019s tariffs were made. They were determined in large part by the president\u2019s own political score-settling with other countries<\/a>, and an ideological preference for trade surpluses<\/a>. And they were not authorized by Congress. In fact, they bypassed the role of Congress<\/a> as a check and balance \u2013 and this is not good for economic democracy in my view.<\/p>\n A protester holds a sign as the U.S. Supreme Court hears arguments on President Donald Trump\u2019s tariffs on Nov. 5, 2025. The second danger is uncertainty. Unlike congressional tariffs, tariffs rolled out through the International Emergency Economic Powers Act under Trump have been altered many times<\/a> and can continue to change in the future.<\/p>\n While supporters of the president have argued that this unpredictability gives the U.S. a bargaining advantage over competitor nations<\/a>, many economists have noted that it severely compromises any goal<\/a> of revitalizing American industries. <\/p>\n This is because both domestic and foreign investment in U.S.-based industries depends on stable and predictable import market access. Investors are unwilling to make large capital expenditures over several years and hire new workers if they think tariff rates might change<\/a> at any time.<\/p>\n Even in the first year of the Trump tariffs, there is evidence of large-scale reductions in hiring<\/a> and capital investment in the manufacturing sector due to this uncertainty.<\/p>\n The third danger concerns that lack of accountability involved in circumventing Congress. This can lead to using tariffs as a stealth way of increasing taxes<\/a> on a population.<\/p>\n Importing companies generate revenue for the government through the additional levies they pay on goods from overseas. These costs are typically borne by domestic consumers, through increased prices, and importing companies, through lower profit margins.<\/p>\n Either way, Trump\u2019s International Emergency Economic Powers Act interpretation has allowed him to use tariffs in a way that would \u2013 if allowed to stand \u2013 bring in additional government revenue of more than US$2 trillion<\/a> over a 10-year period, according to estimates.<\/p>\n Trump frames the revenue his tariffs have raised as a windfall of foreign-paid duties<\/a>. But in fact, the revenue is extracted from domestic consumer pockets and producer profit margins. And that amounts to a tax on both.<\/p>\n Corruption concerns<\/p>\n Finally, the way Trump\u2019s used the act to roll out unilateral and changeable tariffs creates an incentive for political favoritism and even bribery.<\/p>\n This is down to what economists call \u201crent seeking<\/a>\u201d \u2013 that is, the attempt by companies or individuals to get extra money or value out of a policy through influence or favoritism.<\/p>\n As such, Trump can, should he wish, play favorites with \u201cpriority\u201d industries in terms of tariff exemptions. In fact, he has already done this with major U.S. companies<\/a> that import cell phones and other electronics products. They asked for special exemptions for the products they imported, a favor not granted to other companies. And there is nothing stopping recipients of the exemptions offering, say, to contribute to the president\u2019s political causes or his renovations to the White House.<\/p>\n Smaller and less politically influential U.S. businesses do not have the same clout to lobby for tariff relief. <\/p>\n And this tariff-by-dealmaking goes beyond U.S. companies looking for relief. It extends into the world of manipulating governments to bend to Washington\u2019s will. Unlike congressional tariffs under World Trade Organization rules<\/a>, International Emergency Economic Powers Act tariffs discriminate from country to country \u2013 even on the same products. <\/p>\n And this allows for trade deals that focus on extracting bilateral deals that take place without considering broader U.S. interests. In the course of concluding bilateral Trump trade deals, some foreign governments such as Switzerland and Korea have even offered Trump special personal gifts<\/a>, presumably in exchange for favorable terms. Presidential side deals and gift exchanges with individual countries are, as many scholars of good international governance have noted, not the best way to conduct global affairs.<\/p>\n The harms of having a tariff system that eschews the normal checks and balances of the American system are nothing new, or at least shouldn\u2019t be.<\/p>\n![\"A](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2026\/01\/file-20260117-56-qfruse.jpg\")
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\n Bill Clark\/CQ-Roll Call, Inc via Getty Images<\/a><\/p>\n