Instant Reaction: Trump's Global Tariffs Struck Down By Supreme Court

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US Supreme Court struck down President Donald Trump sweeping global tariffs,
undercutting his signature economic policy and delivering his biggest legal
defeat since he returned to the White House. Tyler Kendall,
Bloomberg News White House correspondent joins his hair Washington correspondent.
Tyler give us the latest on what we know about
this Supreme Court ruling.
So it appears that the Court, in a six to
three decision struck down President Trump's tariffs, those broad based
ones that have to do with IIPA, the International Emergency
Economic Powers Act. President put forward IIPA tariffs on two accounts.
One was those ventanyl related tariffs related to Canada, Mexico,
and in part on China. And then the other were
the more broad based ones where he cited persistent trade imbalances.
Now we're still going through this cases coming in in
real time right now to figure out the two questions
that were in front of the court. One was does
President Trump actually have the authority to invoke AIPA to
impose tariffs, because this has never been done before. This
is typically a federal authority that is used to invoke sanctions.
So the question here is whether or not he circumvented Congress.
The other question was about whether or not he actually
invoked AIPA correctly if he's able to by declaring these
national emergencies, did those national emergencies related to betanal related
to these trade imbalances reached a legal standard of what
is known as an unusual and extraordinary threat, that the
president would have this authority to impose a tariff a
regulation of commerce in this way to achieve his objection,
his objectives. We're still reading through this, but it appears
that we have one at least dissenting opinion was from Cavanaugh,
of course, a Justice Brett Kavanaugh, who was appointed under
nominated under President Trump, who says, quote, the court says
nothing today about whether and if so, how the government
should go about returning the billions of dollars that it
has collected from importers. But that process is likely to
be a mess, as was acknowledged at oral arguments. So
that's going to be the entire next phase of this.
It doesn't seem to matter to investors, at least for
the moment. You look at the S and P five hundred.
It did shoot up, it's come back a little bit.
But what's notable here, Paul, is that the best performing
group among twenty four groups is a consumer durable and
apparel's group, lul Lemon, for instance, jumping about five percent
right at the open. It's pared some of that advance
to two point four percent. Lululemon, along with other companies
presumably hurt by this by these tariffs, would benefit therefore
with the removal of these tariffs, although as Tyler made clear,
it's not clear whether there would be a refund or
how that would even be put together.
Yeah, and I'm just kind of reading some of the
Bloomberg headlines. Supreme Court does not address eligibility for tariff refunds,
and Bloomberg new is also reporting that hundreds of teriff
refund lawsuits pending in US Trade Court. So Tyler, this
seems like that's where the rubber meets the road. To
the extent that anybody's going to try to get a
tariff relief or tariff refunds, it's not going to be
easy at least at this stage.
Well, if you want to hear a pretty startling statistic,
AIPA terraffs have been collected for more than three hundred
and one thousand importers, and every company that wants a
refund would need a distinct claim in court. Perhaps we'll
likely see a class action lawsuit that could maybe put
this a little bit more broad based. But when we're
looking at just a massive amount of revenue that was
raised by these IEPA tariffs alone. Of course, the Trump
administration has other tariff authorities that are already in place
Section two thirty two related to national security, for example,
those AIPA broad based tariffs brought in last year more
than one hundred and thirty four billion dollars for the
US government. So it's going to be a complicated process.
It likely would leave the question of refunds to a
lower court, most likely the Court of International Trade, which
first took up this case. There's a few different wonky
points that I had written down here on how this
could ultimately end up happening. One thing to know is
that there's something known as the liquidation process, which basically
is the statue of limitation that a company can ask
for its money back. That's three hundred and fourteen days.
So some of those tariffs imposed on China have actually
been imposed longer than that, so those companies wantn't get
those back. But by and large, I think we're still
within that timeframe for these companies to ask for those requests.
And just the quick mention equities building on their advance
a little bit. With the SMP five hundred now up
a third of one percent, Treasury yields are higher, and
the thinking is that the removal of tariffs would leave
a budget hole that we know already surprise the hundred
thirty billion dollars as of December. Treasury would need to
sell a lot more bonds to bridge the gap, and
that would put some pressure on yields upward pressure and
of course if there are reefusts as part of it,
that would only make the situation worse. It would exacerbate
these moves.
So I guess, Tyler, there's still opportunities. There are still
tools that the president can use to apply some tariffs,
even if this IEPA sweeping one is no longer on.
The table, right and we've already heard telegraphed from the
administration that they're going to pull on these other federal authorities,
some of them are already in place. We talk a
lot about Section two thirty two, those National security tariffs
that the administration has put forward on some of those
critical sectors steel, aluminum, of critical minerals, and a lot
of those other areas that have been a focus of
the Trump administration. When it comes to countering China. We
could also see Section three oh one investigations that's over
unfair trade practices. We saw a lot of those imposed
on China under the first Trump administration. Think allegations of
IP protection violations as one example. And then there's some
lesser known ones like Section three point thirty eight that
hasn't been used since the nineteen forties. I also have
Section two on one here tariffs imposed on goods that
cause injury to domestic industry. There's a lot, But basically
the crux to think of this is that the Trump
administration likes IEPA because that's a lot more flexible, it's
a lot more broad based. A lot of these tariffs
have limits. They have to go away after a certain
amount of time, and the rates can't go that high.
A lot of these tariffs have a fifteen percent sealing
for example, whereas we know the president in some cases
has threaten tariffs you know, fifty percent and onwards.
And also all the different sections that you cited. Most
of these tariffs can't be imposed instantly. There's a bit
of waiting time, and we know the president wants to
declare something and have it kind of be in effect
almost immediately, and the IEPA tariffs allowed him that flexibility.
As you put it, exactly, a Section two thirty two
investigation on average nine months to complete. We have seen
this administration in some cases do this under a more
expedited timeline because they actually pulled on investigations that were
launched under the first Trump administration, so they were able
to make the legal argument that they already had such
a bolstering of the information behind them that they could
make the determination that this meets the national security concerns
or the unfair trade allegations to put on their terrafts.
But to your point exactly, Scarlett, this definitely limits the
flexibility of the administration.
Tyler, thank you so much.
And it's just our luck that Tyler Kendall happened to
be a new.
Clearly, she was not anticipating this.
I mean, we knew that this decision was coming along
at some point, but the Supreme Court had passed up
the previous two or three instances could have come out
with this decision. Tyler Kendall, Bloomberg's Washington correspondent, on our
way back to DC this afternoon.
Thank you so much. Thank you.
All right, let's go to Judie Grossel right now, Bloomberg
Walls host. She joins us here in studio June. I
guess this was expected from somewhat expected from a legal perspective.
Does the six to three.
Vote, does that mean anything one way or the other,
as opposed to maybe have a unanimous nine zero.
Well, I mean, I guess.
It would be preferable for the people in the majority,
for the justices and the majority to say, you know,
this was a unanimous vote, but otherwise, you know, it
doesn't really matter. It's sixty three with the very conservative justices.
In the minority. I mean, this was expected.
After the Supreme Court oral arguments, it seemed as if
this was the definite conclusion, and so people were wondering,
what was taking so long?
Well, what's taking so long?
As it's one hundred and seventy pages, so it's kind
of difficult to get through and to figure out exactly
what happened.
But what happened during the oral arguments was that you.
Have this statute, AEPA that no other president has used
to impose tariffs. And under this statute there's a word
call regulate. So how do you interpret regulate? Does that
mean you can impose tariffs or not? And you know,
a lot of the justices, particularly the liberal Justice, is
harped on the language of the statute.
What does it mean?
I mean, this is a court that's originalist, and they're
trying to interpret all the time with the words of
a statute or the words of a constitution means. So
they were looking at this and saying, you know, where
do you get the authority in this statute to impose tariffs?
And it was pretty.
Obvious during their oral arguments that there were enough votes,
particularly the Chief Justice. And the Chief Justice wrote this opinion.
And I'll just note that when I predicted that, because
whenever there's a big opinion that he's in in the center,
he writes it. He wrote the you know, the Supreme
Court opinion giving President Trump limited presidential authority to be
let's say to be I'm trying to think of the
right word. Not to be prosecuted for ax committed criminal
acts committed in office.
He wrote that one.
He's written like all the very very big opinions. So
when we heard what he said in the oral arguments,
it was pretty obvious what was going to happen. And
it's just a question of why it took so long.
And I think Justice Jackson had said last week that
in an interview that there are nuances to this so
and we won't be able to see the nuances until.
We get through some of this. Yes, pages one hundred
and seventy pages.
It's I mean, there are concurrences and partial concurrences. It's
it's really it's messy. I'd say it's messy.
And that's exactly how Brett Kavanaugh, the one of the
dissenting justices, described the refund process. It was likely to
be a mess, as was acknowledged at oral argument. Is
it surprising then that the justices did not address the
extent to which importers are entitled to refunds That it's
just basically it back to the lower courts.
Well, I think what the justices try to do is
write as narrow an opinion as they possibly can. So
why get into an area they really don't have to
get into. And as you say, there's a lot of
you know, it's going to be messy. And so I
think that that's the way this court operates. They don't
want to rule on something that they don't have to
rule on. And here they did a ruling on tariffs.
You know, a week before the President is going to
make his State of the Union address. That's why I
didn't think it was going to come down today. We
were talking about in the newsroom and like, why would
they do that? And then they're going to sit there.
Is he going to say something about it? He probably
will say something about it while they're sitting there. A
lot of them will be sitting there. The Chief always goes,
so they'll be.
At the State of the Union.
The Chief always goes, Elena Kagan goes usually sort of
mayor goes. Alito hasn't gone since Barack Obama said something
about Citizens United and Alito was shaking his head back
and forth.
So he hasn't been there. But maybe he'll be there
for this. I don't know. So and Justice cours.
It has gone Justice Kavanaugh, Amy Coney, Barrett, so a
lot of them do go. So it'll be interesting to
watch and to see whether any statements are made from
the President about that and whether there's any shaking of heads.
So I was wrong about that, and I admit it.
So this came as a surprise this morning, even though
the decision itself what they did didn't come as a surprise.
Yeah.
If anything, this makes the State of the Union address
that much more interesting to see how it all shakes
out the body language, not just what President Trump will say,
because I'm sure he'll probably say something even before his
address next week.
Yep.
Absolutely, we'll certainly given this.
This the signature economic policy that he has really defined
his administration.
He's been talking about how the Supreme Court, I mean
several times he said the Supreme Court has to rule
in the right way on this. So and he's always
bit well because they've been ruling so much in his
favor on the emergency ducket. He's been very complimentary about
the Court. But we'll see what happens.
II.
Dad, that's going to last all right.
We'll stay on top of the President's social media output
here today, jun Grassa, thank you so much. We appreciated
Jean Grasso, a Bloomberg Law host, here, joining us here
for this momentous decision. Here, the US Supreme Court struck
down President Donald Trump's sweeping global tarrits, undercutting his significant
economic policy and delivering his biggest legal defeat since he
returned to the White House. That is, according to Bloomberg
reporting Scarla Fu and Paul Swooney live here in our
Bloomberg Interactive Broker studio. I'm looking at the top live again.
Great great reporting, real time on this breaking story. Sean
don and senior economics writer. He writes, it's not overstating
things to say this is a historic decision that applies
on at least two fronts. Number One, the policy at issue,
Trump's increase in tarists last year was the largest. It's
the infamous nineteen thirty Smoot Hawley duties. Number Two, it's
application the presidential powers over the economy. Scholars and the
lead up were calling this the biggest case inconomic policy
realm since the Youngstown steelcase in nineteen fifty two, in
which is the court block Harry Truman's been to nationalized
steel mills during the Korean War. Others have liken the
idea of Supreme Court rebrooking Trump on tariffs to the
Court's fight with FDR over the New Deal, So.
A lot of historical contexts.
There are certainly a huge landmark decision by the Supreme
Court determining that President Trump's global tariffs are illegal.
Let's bring in Henrietta Trees.
Henrietta is our go to expert on all things policy
and economics. She is a managing partner and director of
Economic Policy at Vetta Partners. Henrietta the market had largely
anticipated this. We saw it with the reaction in certain
retail stocks, companies that would benefit from the rollback of
these tariffs.
How are you looking at this?
I agree, this is just a tremendous day, a huge
win for the Constitution, for folks who cover tax policy,
for anybody who remembers the Revolutionary War fought against specifically
a taxation power that Congress did not have any say over.
So this is, in my opinion, the largest and most
impactful macroeconomic ruling the courts have ever delivered. So just
a tremendous day. It is in line with what the
market was expecting. You could see that investors were very
prepared to rip the retail stocks. Everybody who's been exposed
to the forty percent trans shipping tariffs, the ad hoc
fifty percent tariffs on Brazil, the wide ranging threats of
two hundred percent tariffs on French wine that have just
been spewing out of the White House for twelve months now.
So it's really an exhilarating day, an incredible day for
the Constitution.
In my opinion, Henriette, is this do you think in
bolden any of President Trump's adversaries, whether in Congress or
just within Washington d c. Apparatus, that maybe this gives
them a little bit more confidence to push back. Is
there any reason to believe that.
Absolutely. I think there's two ways to look at this.
First of all, this is such news for President Trump.
Americans hate the tariffs. They know their taxes, they know
that they're driving inflation, and they don't like them. So
now that that authority has been stripped away from him,
the president no longer has to collect these taxes.
It's up to him to decide.
Whether he wants to migrate into new and different authorities
like Section one twenty two that give him the ability
to impose tires at a fifteen percent rate for the
next five months.
If he wants to do that, he can go ahead on.
But the American public will be very grateful that the
Supreme Court struck these tires down, and even more grateful
if he keeps them off.
So that's one way of looking at it.
And Republicans on Capitol Hail are staring down the barrel
of a very ugly affordability narrative election cycle where we've
seen races as diverse as Texas swing thirty one points
away from President Trump just since he was elected.
Those are tremendous.
Losses for the Republican conference, and most of it is
driven by the President's handling of the US economy. It's
influenced not just the traditional pendant voter that we are
always concerned with, but also with young male and Hispanic
voters who have driven the President to his second term.
So a lot to see here.
A lot to see here. And it's not just American
stocks that are benefiting. I'm looking at for instance, LVMH
Hennessey in Europe climbing on the news, up four point
four percent in European trading. So companies that rely on
exports to the US also benefiting from this ruling. Paul
asks a really important question Henrietta bas.
It's very basic. Our temps rolled back starting today.
They are legal so at border patrol.
One of the things that's questionable here is that the
White House has said all these trade deals are still.
Going to be intact. You know, we've signed these agreements.
That is null and void.
Now if you are an importer and you are at
Customs and Border Patrol, you no longer will suffer paying
for these tariffs. And the Supreme Court has told Customs
and Border Patrol they can no longer collect them. So
this is a problem that the White House is going
to have to address. They have a number of trade
deals that they have signed. I believe there's about eight
at this point, and many of them include a reciprocal
tariff of ten percent in the case of the UK
or nineteen percent in the case of Indonesia.
Those tariffs are illegal.
The Supreme Court has telled the Customs and Border Patrol
people this.
Authority is not permitted.
So it's the importers who are going to rise up
and say I'm not paying. It doesn't matter what the
countries you know, independently decide or whatever the White House does.
So what do we expect this administration? How do you
expect the President and administration to respond here? Do you
think they will aggressively try to work other tariff routes
or maybe just let this issue die and just fade away.
I appreciate the question, Paul. I am widely, wildly out
of consensus on this.
But what I just astrived on Section one twenty two
is just one of the many alternates and alternatives that
the president has Section three oh one, which is, you know,
four hundred and fifty billion dollars worth of tires on China.
We could re up that and apply it to the EU, the.
UK, or Brazil. Well, all of those have been threatened.
But think about what functionally that means. It means that
individual businesses will have to go out again, get their
trade lawyers on the payroll to comply with brand new,
potentially even unused authorities that they'll have to comply with
once again. Is it a fifteen percent tire freight under
Section one twenty two?
Does it exist?
Now?
When's the President going to put it on?
What do I need to worry about with the national security, taft,
the confusion, and the uncertainty, which were the buzzwords following
Liberation Day in April, are going to come roaring back.
In the event the President decides to migrate away from
my EPA and move into new and different authorities. I
think it would be extraordinarily disruptive. And again with my
eye on the election cycle and then affordability narrative, the
President I think is already on a very tight leash
and he's not going to have the leeway to fully
reimpose anywhere near the revenue that has been collected by
eepas so far. So I don't think these TIFFs will
ever come back at their current level, and I think
will be much more restrained going forward.
How does this all add up to what the President
was planning to say in his State of the Union
next week, because affordability was something that the White House
has signaled it's really going to start focusing on, especially
with the Metrum elections coming up. Now that the tariffs
are ruled illegal by the Supreme Court, how does he
fold that into his larger platform?
Man, I mean, that is a pretzel of some logic
they're going to have to work through here. Because, of course,
the President has been saying that the tariffs have been
a huge boon to the US economy. None of that
is true. We just saw a very soft GDP print.
We see that manufacturing jobs have lost seventy two thousand
in the last year since Liberation Day. We see that
prices have increased across a lot of the retail space.
So that's what consumers are feeling.
And you can't sell the American public on the idea
that you're fixing our deficit problem when the deficit continues
to rise and the trade and goods deficit continues to rise.
So all of the arguments the White House has made
are false, and now he's going to have to sell
this to the American public. I suspect it'll be very
uncomfortable for the front row of the House floor when
he delivers the State of the Union on Tuesday. I
will certainly be watching that. But they really stood up
for the Constitution here and the President's message. If he
wants to migrate to affordability, he can talk about other
things like the housing agenda that they have. I mean,
it's not realistic to think that a fifty year mortgage
is coming, but those are the kinds of.
Pieces that he should focus on.
I imagine there will be quite a bit of grievance
touted on the tirefront.
Interesting.
All right, Henrietta, thank you so much for joining us.
We really appreciate getting a few minutes of your time
and your expertise. Henrietta Trece's managing partner and director of
economic policy at Veda Partners.
We should note that the President has responded. According to
Caitlin Collins of CNN, who tweeted out or posted on
social media, President Trump commented on the Supreme Court ruling
striking down his tariffs while inside the White House breakfast
with governors this morning, calling it a quote disgrace. I'm
told he told those gathered that he has a backup plan. Again.
That is according to Caitlin Collins, reporter at CNN, the
President calling the ruling against his tariffs a disgrace.
Paul, Yeah, no surprise there, and we'll see. I guess
we were talking to Henrietta trez what the response will
be from President Trump, whether he will let this kind
of fade away, or whether he who use some of
the other options that he does.
Have many, many different alternative options, including filing Recession two
thirty two, two oh one, three oh one one two
three thirty eight.
Oh boy, yeah, there's a lot exactly.
All right, we welcome back to our studios, June Grossos,
Bloomberg's legal analyst here, June. Now you've had a couple
more minutes to one hundred seventy page ruling.
Any don't do that to me, Paul, don't do this
to me.
So, I mean, it's it is.
I mean, we're just reading some of the reporting on
the Bloomberg libe really calling in a historic ruling.
It is historic.
And also it's so important because you know, as we've
discussed before, this Supreme Court has been a size for
ruling for Trump on the emergency docket so many times,
I mean a majority of the times, more than the.
Majority, a vast majority of times.
They're just a couple of cases where they didn't allow
him to go forward with his agenda on the emergency dockets.
So here you have this enormous case on his you know,
sweeping global plans. And if the Supreme Court had not
done this, if they had gone against the text of
the statute and had ruled in his favor, think about
what we'd be saying right now, this court is totally
in Trump's pocket, would be one of the things that
would be said. So it's so important on so many
different levels, not only the level of what's going to
happen now and that the tariffs have been declared illegal,
but also for the integrity I think of the Supreme Court.
It would have been shocking if they had ruled for
the tariffs. So joining us now is Dave Townsend. He's
a partner at Dorsey and Whitney, Trade attorney. David, Can
you explain for us the basic premise of the Supreme
Court's majority opinion?
Sure, June, and it's great to be with you. Yeah.
The basic premise of the opinion is that the IEPA Statute,
which empowers the President to take action to regulate importation,
doesn't extend to imposing tariffs, and so as a matter
of statutory interpretation, the President exceeded the authority in issuing
the global and fentanyl related tariffs.
Is there anything and I know you haven't gotten through
the whole opinion, but is there anything that surprised you
about this opinion?
One thing that did surprise me a bit, June about
the opinion was how definitive it was with respect to
the statutory interpretation question.
The lower courts had been maybe a bit more measured.
They had said that the use of the IPA authority
had exceeded what I was intended to permit, and the
Supreme Court, it looks to me what went one step
further and said that the language of the statue doesn't
permit tarif's full stop.
So David doesn't what's the sixty three vote mean to you?
If anything is a win a win? Or is a
nine zero better than a six to three? How do
you hashild the market think about that?
Yeah, I mean I think a win is a win.
Right, you only need five to uphold the lower court
and find the tariffs were unlawful.
But I do think the six to three vote.
Provides even, you know, even a sharper defeat here for
the administration's arguments, I mean.
You had.
Fine and I know Justice Cavanaugh during the oral arguments
talked a lot about what President Nixon did on the
predecessor statue to AYEPA. Where do they find the authority
of the president to issue these tariffs?
Yeah?
So the predecessor to AEPA was the training with the
Enemies Act Twya, and ac Cordan previously said that the
language in Twya, that is to regulate importation, did authorize
limited tariffs, and so I think the Descent is pointing
back at that and saying, consistent with that holding, we
would find that the same language that Congress used in Twiya,
that carried it over into Iepa would authorize the imposition
of tariffs. And I mean, I do think that as
a matter if you were reading AEPA in a vacuum,
the question of whether the language to regulate importation permits
tariffs is tricky.
It's difficult explain why it's tricky.
Well, I think the administration's argument was we can clearly
ban imports under that language and under AIPA, and they've
done that for decades under various economic sanctioned statutes. And
so the theory would go, if we can ban imports,
why can't we do something more calibrated and measured, such
as impose a tariff.
Just a reminder, if you're just joining us, we're speaking
with Dave Townsend, partner with Dorsey and Whitney, and June Garasso,
the host of Bloomberg Law. With us here Polswenian Scarlet
Foo on Bloomberg Intelligence after the Supreme Court struck down
President Trump's global tariffs, saying that he exceeded his authority
by invoking a federal emergency powers law. Dave, let me
ask you a dumb question. President Trump does not respond
well to legal setbacks. We know that he appeals to
a higher court an authority. There is no higher court
than the Supreme Court. But is there really no legal
recourse for him left here? Could he, I don't know,
seek to impeach a justice or three justices?
So I mean, I think there's there's kind of two
dimensions here in terms of what happens next. One is
with respect to tariff refunds and whether importers are owned tariffs,
And the second is what does the administration do next?
What is the US tariff policy in light of this opinion?
And the administration has been laying the groundwork, I'm sure
behind the scenes, but in public too, saying continuity will
carry the day as of today and moving forward, and
the tariffs in one form or another will be reimposed
under probably a combination of authorities. So I think, you know,
the refund issues important to companies moving forward, the policy
issue may not actually move that significantly, at least in
you know, the near term. I think they're going to
be ready to come out with something very quickly to
backfill and replace the IPA tariffs.
All right, Dave, thank you so much for joining us.
Really appreciated Day Townsend. He's a partner with Dorsey n Whitney.
Give us his thoughts on the legal side of this case.
And of course June Grasso, legal analyst for Bloomberg, joining
us as well.