Amid the tumult caused by last week’s tariff war-related market instability, Donald Trump released an executive order titled: “Maintaining Acceptable Water Pressure in Showerheads.”
Like many, I initially thought it was a satire until I came across a Bloomberg article by Noah Feldman that framed it as yet another power play.
Feldman pointed out that this isn’t truly about showerheads; rather, it’s an effort to undermine the Administrative Procedure Act (APA) of 1946, which federal courts are using to challenge Trump’s unlawful maneuvers.
The order instructs the energy secretary to overturn a regulation from the Biden administration that defined “showerhead,” established through the APA’s “notice and comment” process.
The APA mandates that the rescission of a regulation must follow the same procedures, yet Trump’s order claims: “Notice and comment is unwarranted because I am issuing the repeal.” In other words, it’s simply because I declare it.
Feldman asserts that this constitutes a blatant violation of the law, contradicting the fundamental purpose of the APA. If the Supreme Court allows this to happen, another judicial safeguard against Trump’s autocratic tendencies will disappear.
Keep in mind, he stacked the Supreme Court during his first tenure.
Moreover, at 2 AM Friday, the US Senate finalized the politicization of the military by confirming Retired Air Force Lieutenant General John Dan “Razin” Caine as Chairman of the Joint Chiefs of Staff.
Caine has not served in any of the seven prior roles mandated by law for this position, but the president can override that statute “in the national interest,” which he has done to appoint a loyalist to the highest military office in the US armed forces.
Should we take Trump literally?
As he approached a third election, Trump repeatedly communicated his intentions to the American public, often in a manner that seemed overly dramatic or alarming.
It’s commonly said that Trump’s elaborate declarations should be taken seriously, but not literally, interpreted as the exaggerated rhetoric of a showman who can’t contain himself.
But what if he should indeed be taken at his word?
Here’s a reminder of some of his statements:
“We pledge to you that we will root out the Communists, Marxists, fascists, and the radical-left thugs that live like vermin within the confines of our country, that lie and steal and cheat on elections … The threat from outside forces is far less sinister, dangerous, and grave than the threat from within. Our threat is from within.”
“I am your warrior. I am your justice. And for those who have been wronged and betrayed, I am your retribution.”
“The United States is an occupied country.”
“I think it should be very easily handled by, if necessary, by the National Guard, or if really necessary, by the military.”
“I am the only one who can save this nation.”
“I felt then and believe even more so now that my life was saved for a reason: I was saved by God to make America great again.”
Recall that to impose tariffs on April 2, Trump declared an emergency under the International Emergency Economic Powers Act of 1977, allowing him to circumvent Congress for emergencies “originating outside the United States.”
The “emergency” justifying his disruption of the global trading framework and forth decade of US leadership hinges on trade deficits, which his executive order claims signal “a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and US trading partners’ economic policies that suppress domestic wages and consumption.”
If this qualifies as an emergency, then anything does.
In cases of emergencies that occur within the US, the National Emergencies Act of 1976 grants the president extraordinary powers. If a national emergency is declared, he acquires control over communications and information, including the ability to seize or control communication infrastructures, radio, wire services, and potentially the internet itself.
He could also manage transportation and infrastructure for national defense and access funds designated for disaster relief or military construction.
Civil liberties, such as movement restrictions or limitations on gatherings, could also be curtailed, allowing the mobilization of the National Guard or military reserves, using the military domestically in support roles (though this is constrained by the Posse Comitatus Act, which mandates congressional authorization).
Congress has delegated 136 distinct powers for emergencies; only 13 require a declaration by Congress at that time.
It seems increasingly likely that Trump will exploit a crisis alongside the National Emergencies Act to engineer a revolution in the United States.
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Tariff impact is astonishing and earth-shattering
As for the trade war turmoil he has conjured, it has always been centered on China rather than the 58 other nations facing reciprocal tariffs, like Liechtenstein and Lesotho.
Currently, the US is imposing a 145 percent tariff against China’s 125 percent, but trade volume between the two nations was set to collapse once tariffs rose beyond 50 percent.
Should these tariffs endure, trade will stop and the US could plunge into a severe recession. The ramifications for Australia are staggering.
Both our largest trading partner and most significant ally are on the brink of a major economic downturn, necessitating the kind of fiscal and monetary stimulus previously required during the pandemic and the global financial crisis.
Nevertheless, both nations are now heavily indebted and face the loss of financial market confidence — particularly the US, where that concern is already manifesting.
Last week, while the US dollar fell, long-term market interest rates rose, which reflects a nation losing capital as investors seek safer havens. The fact that this is occurring in the United States, the ultimate safe haven and steward of the world’s reserve currency, is astonishing and alarming.
However, I’m uncertain if this pressure was what compelled Donald Trump to “blink” and halt tariffs on countries other than China, which has been a prevalent narrative — that it was due to the actions of the ‘bond vigilantes.’
Bond vigilantes are traders who react to poor governmental policies by pushing market interest rates higher, prompting change. They notably reacted in October 2022, influencing UK PM Liz Truss after her disastrous mini-budget, which sent UK 10-year bond yields from 1.8 to 4.3 percent.
Yet, the US 10-year bond rate only increased by half a percent, from 4 to 4.5 percent, which wouldn’t have sufficed to prompt any reaction, especially since it was already in decline when the pause was declared.
A far more plausible explanation is that these tariffs were never genuinely meant to endure; they were always intended as leverage to extract trade agreements from smaller nations. (“Nice little export industry you have there, pity if something were to happen to it.”)
The threatening of those tariffs likely wouldn’t have succeeded because no one would take them seriously. Calculating reciprocal tariffs simply based on trade deficit size? It was nonsensical, derided by economists and reputable analysts worldwide.
Thus, he had to implement the tariffs to substantiate that he would, and then suspend them while compelling panicked exporters into negotiations.
Expect announcements over the next three months that glorify the Godfather, Mr. Trump. The United States has transformed into a gangster state.
Australia ought to reconsider its relationship with America as the alliance is becoming one of servitude.
Alan Kohler is a finance presenter on ABC News and also contributes to Intelligent Investor.
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