Trump weighs emergency declaration to advance tariff agenda

President-elect Donald Trump is reportedly exploring the use of a national economic emergency declaration to enact sweeping tariffs on both allies and adversaries, according to sources familiar with the discussions. The potential move, which would leverage the International Economic Emergency Powers Act (IEEPA), is part of Trump’s broader effort to recalibrate global trade dynamics during his second term.

The IEEPA grants the president broad authority to regulate imports under a national emergency declaration, bypassing the need for stringent national security justifications. Trump has shown a particular affinity for the law, sources noted, as it provides the flexibility to implement tariffs without extensive procedural hurdles.

“Nothing is off the table,” said one insider, emphasizing that the concept of invoking a national emergency has been a central focus of internal discussions.

This is not the first time Trump has turned to the IEEPA. In 2019, he threatened escalating tariffs on Mexican imports under the act to pressure Mexico into curbing the flow of undocumented migrants across the US border.

The prospect of new tariffs under a national economic emergency has already begun to ripple through financial markets, adding to existing uncertainty over the incoming administration’s trade policies.

Pound hits eight-month low

The British pound slid to $1.232, marking its lowest level since April 2024, as the dollar's broad strength overshadowed elevated UK borrowing costs. Investor concerns were further stoked by reports of Trump’s potential emergency tariff plan, adding to the pound’s woes.

Despite stubbornly high UK inflation and gilt yields surging to multi-decade highs, markets are pricing in a 50-basis-point rate cut by the Bank of England this year. Expectations of monetary easing have eroded confidence in the pound, even as the cost of UK government borrowing outpaced gains in US Treasury yields.