Yeah it's a big problem... especially with Trump declaring everything under the sun as being a threat to the US and an emergency. And now that Microsoft has done this, he now knows it's possible to cut off other countries from IT services. He has a weapon he likely didn't know he had before now.
US companies will cave in to him without any hesitation so it doesn't really matter whether the US President has the authority to do this.
IT departments around the world need to diversify so they aren't dependent on US tech companies.