The future of many of Donald Trump’s tariffs is up in the air, with the Supreme Court expected to rule on the administration’s global trade barriers any day now.
But the question of whether a policy is legal or constitutional — which judges are now considering — is not the same as whether it is sensible. And as a trade economist, I worry that Trump’s tariffs also pose a threat to “economic democracy,” that is, the decision-making process that incorporates the views of everyone affected by the decision.
Founders and economic democracy
In many ways, the American founders supported economic democracy. For this reason, in the US Constitution, Congress was exclusively granted powers to prepare tariffs and taxes.
And rightly so. Taxes can often represent a sticking point between a government and its people. Therefore, it was considered necessary to grant this responsibility to the branch most closely linked to the government and the governed: an elected Congress. Through this agreement, the legitimacy of tariffs and taxes would be based on voter approval; If the people were dissatisfied, they could act through the ballot box.
To be fair, the president is not powerless on trade: On several occasions over the last century, 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.
The interests for economic democracy
What is now at stake before the Supreme Court is Trump’s interpretation of one of those emergency measures, the International Emergency Economic Powers Act of 1977.
In April 2025, Trump interpreted the law — which gives the president powers to respond to “any unusual and extraordinary threat” — to allow him to impose tariffs of any amount on products from nearly every country in the world.
However, the law does not include any checks and balances on the president’s powers to use tariffs and does not even mention tariffs among its resources. Trump’s unfettered use of tariffs in this way was unprecedented in any emergency action ever taken by an American president.
Constitutional and legal issues aside, the measure raises several concerns about economic democracy.
The first danger is a concentration of power. One reason tariffs are subject to debate and voting in Congress is that they provide a transparent process that balances competing interests. It prevents the interests of a single individual—such as a president who might substitute his own interests for those of the general public interest—from controlling complete power.
Instead, it subjects any proposed tariffs to open competition of ideas among elected politicians.
Compare this to the way Trump’s tariffs were imposed. These were largely determined by the president’s own political reckoning with other countries and an ideological preference for trade surpluses. And they were not authorized by Congress. In fact, they bypassed Congress’s role as a check and balance, and this is not good for economic democracy in my opinion.
The second danger is uncertainty. Unlike congressional tariffs, the tariffs implemented through the International Emergency Economic Powers Act under Trump have been modified many times and may continue to change in the future.
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Although the president’s supporters have argued that this unpredictability gives the United States a negotiating advantage over competing countries, many economists have noted that it seriously compromises any goal of revitalizing American industries.
This is because both domestic and foreign investment in US-based industries depends on stable and predictable access to the import market. Investors are not willing to make large capital investments over several years or hire new workers if they believe that tariff rates could change at any time.
Even in the first year of Trump’s tariffs, there is evidence of large-scale reductions in hiring and capital investment in the manufacturing sector due to this uncertainty.
The third danger has to do with the lack of accountability that comes with bypassing Congress. This can lead to using tariffs as a covert way to increase taxes on the population.
Importing companies generate income for the government through the additional taxes they pay on goods from abroad. These costs are usually borne by domestic consumers, through increased prices, and importing companies, through lower profit margins.
In any case, Trump’s interpretation of the International Emergency Economic Powers Act has allowed him to use the tariffs in a way that, if allowed to stand, would generate additional government revenue of more than US$2 trillion over a 10-year period, according to estimates.
Trump presents the revenue his tariffs have raised as a windfall from duties paid by foreigners. But in reality, revenue is taken from the pockets of domestic consumers and the profit margins of producers. And that amounts to a tax for both.
Corruption concerns
Finally, the way Trump has used the law to implement unilateral and modifiable tariffs creates an incentive for political favoritism and even bribery.
This is due to what economists call “rent seeking” – that is, the attempt by companies or individuals to extract extra money or value from a policy through influence or favoritism.
Therefore, Trump can, if he wishes, favor “priority” industries in terms of tariff exemptions. In fact, it has already done so with large American companies that import mobile phones and other electronic products. They requested special exemptions for the products they imported, a favor that was not granted to other companies. And nothing prevents beneficiaries of the exemptions they offer, for example, from contributing to the president’s political causes or his White House renovations.
Smaller American companies with less political influence do not have the same power to lobby for tariff relief.
And this deal-making of tariffs goes beyond American companies’ search for relief. It extends to the world of manipulating governments to bend to Washington’s will. Unlike Congressional tariffs under World Trade Organization rules, the International Emergency Economic Powers Act tariffs discriminate from country to country, even on the same products.
And this allows for trade agreements that focus on extracting bilateral agreements that occur without considering the broader interests of the United States. In the process of signing bilateral trade deals with Trump, some foreign governments such as Switzerland and Korea have even offered him special personal gifts, presumably in exchange for favorable terms. Presidential side agreements and gift exchanges with individual countries are, as many scholars of international good governance have noted, the best way to conduct global affairs.
The harms of having a tariff system that bypasses the usual checks and balances of the US system are nothing new, or at least they shouldn’t be.
In the late 18th century, with the demands of a tyrannical and irresponsible king at the fore, the founders crafted a tariff order intended to maintain democratic legitimacy and prevent the concentration of power in the hands of a single individual.
A challenge to that order could have worrying consequences for both democracy and the economy.
*Kent Jones is Professor Emeritus of Economics at Babson College.
This article was originally published on The Conversation/Reuters
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