News & Analysis
News & Analysis

National Emergency

18 February 2019 By GO Markets


Image result for twitter logo symbol By Deepta Bolaky

USA national emergency

President Donald Trump has declared a national emergency over the US-Mexico border swiftly after the spending bill was approved. It is not the first national emergency the US will face. Other situations of emergency were triggered by former Presidents like Barack Obama or George W Bush, but it was primarily for purposes of addressing crises like Swine Flu in 2009 and the September 11 Attack in 2001, and not for projects that Congress would not support.

trump tweet response

What is a National Emergency?

A state of emergency is a situation in which a government is empowered to perform actions that it would typically not be permitted. A government can declare such a state during a disaster, civil unrest, or armed conflict.

Can the National Emergency be stopped?

The National Emergencies Act of 1976 allows Congress to carry a check on presidential emergencies. However, both chambers- the House and the Senate need to approve. The Senate is controlled by the Republicans, and are unlikely going to fight against the President even though they have expressed concerns that it can send a dangerous precedent.

At this stage, it appears that the fight will continue in courts whereby the President will have to prove whether the immigration issue is an actual emergency.

Impact on the financial markets

In the short-term, the border dispute seems to have little on the markets. Investors are cheering up positive trade headlines and the avoidance of another US government shutdown instead. The equity markets were flashing green on Friday. As of writing, Asian stocks and the Australian equity benchmark is climbing higher on trade optimism.

In the long-term, depending on the evolution of the national emergency, the border wall reiterates the partisan dysfunction in Washington. Such hyper-partisanship paralyses Congress, and the rise of endless gridlock can weigh on consumers and investors’ confidence.

The President’s Day is marred by the National Emergency Controversy!

This article is written by a GO Markets Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk.

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