Donald Trump likes to present himself as a leader guided by instinct and personal conviction. International treaties, diplomatic traditions, and established norms are, in his view, merely suggestions that he can ignore at will. This attitude lies at the heart of his political identity: America first, and whatever Trump believes is good for America is what will happen.
It is a simple narrative that resonates with a substantial part of the American electorate. But reality is more stubborn than this self-image suggests. The true limits of Trump’s power are not defined by his own moral compass, but by three forces he cannot control: the courts, the voter, and the bond market.
In the coming week, this reality threatens to assert itself once again. The federal government is on the brink of yet another possible shutdown, this time over funding for ICE, the immigration and customs enforcement agency. The odds of such a shutdown have risen sharply as Republican hardliners and moderates face off against one another. Trump demands maximum resources for his priorities, but ultimately must navigate between different factions within his own party and a Congress with its own dynamics. A shutdown would not only disrupt the day-to-day functioning of government, but would also further undermine confidence in the governing capacity of the United States.
At the same time, a legal battle is unfolding that raises questions about the limits of presidential power. Several cases before the Supreme Court directly affect Trump’s policies. The constitutionality of reciprocal import tariffs is under scrutiny, a case that could put the entire tariff policy on shaky ground.
In addition, there is an ongoing case involving Fed governor Lisa Cook, centered on the question of whether a president can dismiss independent regulators at will. Even a conservative Supreme Court, of which Trump appointed three members, may conclude that certain actions cross constitutional boundaries. The rule of law is more resilient than many critics fear, even if it sometimes takes a long time to do its work.
The voter will have their say this fall during the midterm elections. Historically, midterms are rarely kind to the sitting president. But there are signs that the unpredictability of Trump’s policies is also raising questions among Republican voters. The chaos around tariffs, the diplomatic tensions with allies, and the constant administrative turbulence are beginning to take their toll. Although Democrats are struggling with their own direction, a shift in Congress could significantly constrain Trump’s room to maneuver. The voter is ultimately the final arbiter in a democracy, however imperfectly the system functions.
But perhaps the most immediate brake on Trump’s policies comes from the bond market. Trump openly measures his success by the performance of financial markets. A rising stock market is, for him, proof of successful policy, while a falling market is a signal that adjustments are needed. This self-chosen benchmark makes him vulnerable to the whims of investors worldwide. And those investors are growing nervous. The international geopolitical conduct of the United States, from trade wars to unpredictable alliances, threatens to trigger a buyers’ strike in US government bonds. China, Japan, and other major holders of American debt are reconsidering their positions. If demand for Treasuries declines, interest rates rise, and with them the financing costs for the US government and economy.
Recent tensions with Canada illustrate this mechanism. As Trump continues to push for new tariffs on Canadian goods, Canadian officials are recalibrating their trade relationships and looking more explicitly to China as an alternative partner. Trade wars do not only isolate the opponent, but also the aggressor. The world is reorganizing itself, slowly but surely, around an America that is no longer seen as a reliable partner. That reorganization comes at a price, and that price becomes visible in bond prices.
What is fascinating about Trump is that, on some level, he understands this dynamic. His sudden policy reversals, the tariffs that are announced and then postponed, the threats that are withdrawn, are often reactions to market signals. The president who claims to be indifferent to external pressure turns out to be highly sensitive to movements on Wall Street. The man who presents himself as an unconstrained leader is, in reality, constrained by the judgments of judges, voters, and bond traders.
Here Trump touches on a universal truth that he should know as a real estate developer: people with debt ultimately no longer decide their own future. The United States carries a national debt of more than 36.000 billion dollar, and that growing debt must be continuously refinanced. That means America depends on the willingness of domestic and foreign investors to keep buying that debt. As soon as that willingness diminishes, interest rates rise and fiscal space shrinks.
A president may have grand plans for tax cuts or defense spending, but if the market loses confidence, those plans evaporate in the heat of rising interest expenses. The creditor ultimately dictates the terms.
Han Dieperink is chief investment officer at Auréus Vermogensbeheer. Earlier in his career, he was chief investment officer at Rabobank and Schretlen & Co.