Tariff Shock Waves Circle The Globe

Turning longtime grievance into emergency — markets dive as countries vow reprisal

Author

Matt Davis
April 04, 2025

Lol you’ll need a few fireballs and some bananas to tackle the graphs

This morning’s lead stories by Alan Rappeport and Ana Swanson round up yesterday’s feverish reporting on the impact of Donald Trump’s new tariffs.

Mr. Trump has for years made the case that the U.S. faces a “dire economic emergency” as a result of trade imbalances with countries across the globe, Mr. Rappeport reports.

Now the U.S. faces a dire economic emergency for a different reason: Because the stock markets have tanked more than they have since Mr. Trump was last in power during the coronavirus pandemic.

“Since his days as a real estate developer in the 1980s , Mr. Trump has been railing against the trade and business practices of other countries that he found to be unfair. Back then, when Japan was a booming economic rival, Mr. Trump would assail its tactics.

‘If you ever go to Japan right now, and try and sell something, forget about it, Oprah. Just forget about it,’ Mr. Trump said in a 1988 interview with Oprah Winfrey, adding, ‘They come over here, they sell their cars, their VCRs, they knock the hell out of our companies.”

The tariffs are an attempt to force foreign companies to make their VCRs in this country and of course, they won’t work. Foreign companies will rely on their governments to retaliate with tariffs of their own, the U.S. economy will tank, and U.S. voters will replace Donald Trump with a president who is able to distinguish a grievance from the basis for global economic policy. Hopefully that’ll happen in 2028 unless he dies before then, but by 2026 the House and Senate will be under Democratic control assuming the Democrats can get out of their own way.

Great Presidents have their legacies. Obamacare. Reaganomics. Trump? Well…I think he’s going to be best forgotten.

Mr. Trump was “able to impose tariffs by designating America’s trade deficit a national emergency.” The problem with that rule is, what does my 401(k) tanking at the stroke of a pen constitute?

Many economists and legal experts “believe that the idea of an emergency has been concocted to justify Mr. Trump’s desire to impose sweeping import duties without regard to congressional approval or international trade rules.”

The reason they believe that? Many economists and legal experts? Because it’s true.

The use of such presidential powers in such a manner had never been employed before this year. In February, Mr. Trump declared the smuggling of fentanyl and illegal immigration from Mexico and Canada to be national emergencies that justified tariffs on those countries. Defining the trade deficit that way is viewed as more questionable because most economists see trade deficits as normal functions of an economy.

The fact that the U.S. economy was outperforming the rest of the world when Mr. Trump took office in January also could undercut the theory that America is under threat. In mid-January, the International Monetary Fund upgraded its growth outlook for the United States to 2.7 percent this year while forecasting weaker growth outlooks for Europe and China.

In other words the only emergency is that Donald Trump wants there to be an emergency so he can override congress and impose a policy that will ruin the economy and create another emergency. Or, as Mr. Rappeport writes: “As lawyers debate whether the United States is facing an economic emergency, the trade wars that his tariffs are poised to ignite could end up creating one.”

That’s the sort of sentence you don’t want me to read in the newspaper in the morning, I realize. I’m sorry! But more than half of this country voted for him. Those are the rules in a democracy.

Scott Lincicome, vice president of general economics at the Cato Institute, said that calling the trade deficit a national emergency is “beyond a stretch.” He suggested that likely legal challenges to the tariffs will be focused on the definition of an emergency and whether the president has the power to use global tariffs as a solution. The fact that the White House has not provided an analysis to show how it determined what it called “reciprocal” tariff rates on dozens of countries has also raised questions.

“On the economic side of things, pretty much everybody is coming to the conclusion quite quickly that these numbers are just made up,” Mr. Lincicome, a trade lawyer said. “I’d be stunned if there’s not a legal challenge.”

Except which law firm would help file it? Paul, Weiss?

However, there is already a push to get a legal challenge underway. Ilya Somin, a law professor at George Mason University, is working with the Liberty Justice Center, a nonprofit, to find potential clients for a lawsuit. He said that a potential client would be a business that is forced to pay the new tariffs on its imports and that he was optimistic about the potential for a case.

“This statute can only apply in emergency situations and extraordinary security threats, none of which exist,” Mr. Somin said. “It’s not clear that this statute even authorizes the use of large-scale tariffs at all.”

In an interview on Fox News on Thursday, Vice President JD Vance argued that the United States could not afford to keep borrowing money from China just to buy its cheap products and let American factories shutter.

“For 40 years, we have gone down that pathway,” Mr. Vance said. “And yes, this is a big change — I’m not going to shy away from it — but we needed a big change.”

I agree that we do need a big change. Of administration. In office. Perhaps Mr. Vance is secretly hoping this will be his boss’s undoing so that he can unleash his eyeliner on the Oval Office.

The main challenge here is that given Mr. Trump’s policy of never admitting mistakes and always attacking, this is a self-created crisis from which there is no easy way out.

For voters, of course, there is a very simple way out of it. We just have to wait. And suffer.

And to think we could have had a Black woman in office who tended to speak in long sentences. Imagine. I don’t know about you, but I’m a little furious right now. We had a clear choice between an evidently competent candidate and this guy, and we chose this guy.

The best advice I read yesterday about the stock market was to “turn off the news, and read a book.”

I’m reading three at the moment: “Careless People,” about Facebook and based on a quote from “The Great Gatsby,” and “Patriot,” by the now-dead leader of the Russian opposition, and “Cleaving,” the nervous breakdown book by Julia and Julia author Julie Powell. It’s an appropriate combination, I think, for the times we’re living through.

We’re also off to Virginia for the weekend if anybody would like to rob our apartment. Or, you know, take a risk that Big Yusuf from the bodega might be house-sitting.

Matt Davis lives in Manhattan with his wife and kid.

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