USA | Donald Trump: Grasping power through tariff policy

Trump's tariff policy isn't just a concern for the leaders of exporting nations. The massively increased tariffs also effectively mean the largest tax increase for the US economy since the 1950s. The Wall Street Journal estimates that 50 to 60 percent of the new fees will be borne by US companies. Overall, they are estimated to amount to $3.9 trillion, or nearly 1 percent of US gross domestic product (GDP), over the next ten years. This is far more than, for example, the funding for expanded health insurance under President Barack Obama (0.4 percent of GDP), which was fiercely opposed by Republicans, also citing the cost.

The anti-tax lobby in the US is influential: think tanks such as the Liberty Justice Center, the Federalist Society, and chambers of commerce are mobilizing against the tariff policy, which essentially amounts to a domestic tax increase. But in April, the US Congress failed to defend the legislative branch's own rights against the White House, which had enacted the tariff increases by bypassing Parliament. The last attempt to thwart Trump's tariff policy failed in a vote in the Senate – even though Republican politicians had previously criticized Trump because their voters feared sharply rising prices due to the import tariffs. The pressure from the White House ultimately proved too great, or the courage of the senators too lacking.

It now lies in the hands of the Supreme Court to decide whether Trump can impose a tax without congressional authorization. After seven of eleven appeals court judges provisionally instructed the president at the end of August, the hearing in the case, brought by twelve states, will begin in early November. Despite the dominance of Republican-nominated justices on the Supreme Court, the outcome is unpredictable.

An unusual open letter issued in advance demonstrates how explosive this decision will be: Libertarian and conservative lawyers, along with liberals, warn that the court's support for "taxation by mere proclamation" by the president would constitute a violation of the Constitution, since the right to tax clearly lies with Congress. A decision in favor of Trump's tariff policy would open the door to arbitrary tax collection, the letter continues. "The authority to levy taxes must not be allowed to quietly slip into the hands of the president due to inflexibility, inattention, or creative interpretations of the law."

In contrast, US Treasury Secretary Scott Bessent claims that the cancellation of tariff revenues already earned and the resulting jeopardization of previously negotiated trade agreements would be "catastrophic." Trump himself writes that a decision against him would represent the "literal destruction" of the United States and degrade the country "to a Third World nation."

In addition to foreign sellers who doubt whether they will even be able to sell goods in the US, US industry players are also worried about whether they will be able to operate profitably under the coming conditions. General Motors, for example, claims that the higher tariffs will swallow up five billion dollars this year alone. In addition, inventories from the era before Trump's erratic tariff policy are dwindling, and dealers are often unsure of the terms under which they should order or price their goods.

Many companies also rely on foreign machinery. When politicians currently give speeches in factories about a "renaissance of American industry," they are often shown on the factory floor afterward that the machines used in production all come from Europe or Asia. Such moments, however, receive considerably less media attention than the arrest of 300 South Korean Hyundai training employees in Georgia by US immigration authorities. According to economists, globalization cannot simply be undone with a round of tariff increases, no matter how radical.

If the Supreme Court gives the White House the green light on the legitimacy of Trump's trade policy, this would raise questions about a fundamental reorientation of the separation of powers in the US political system – a massively strengthened executive branch could trump any other institution in the event of a conflict. The president would have unprecedented power not only over heads of state and corporate CEOs around the world, but also over the wallets of his own citizens.