Trump Tariffs on Trial: What's at Stake in Supreme Court Landmark Case

Bloomberg

Watch Trump Tariffs on Trial: What's at Stake in Supreme Court Landmark Case - Bloomberg on Dailymotion

Transcript

00:00I think what's really at stake most of all is whether or not the president has violated the

00:05constitution. Because again, we have to go all the way back to the founding of our country.

00:09No taxation without representation is on that license plate on everybody in the District of

00:15Columbia. And what it really is saying is the constitution gives to the Congress, not to the

00:21president, the power to impose taxes or tariffs. The constitution gives to the Congress, not to

00:28the president, the right to regulate foreign commerce. So the issue is, how is it that

00:33President Trump can now start to impose all of these tariffs? Again, this huge increase in taxes

00:39on Americans without the Congress. The constitution explicitly gives to Congress the authority to

00:45impose tariffs. Yes. Can Congress delegate that authority and has it in this statute? Right.

00:51And so the issue that is really before the court is whether or not the Congress has handed over

00:57this power that it has, it has the power to impose tariffs or duties or taxes. Did it grant that

01:05authority, hand it over to the president through the passage of this law, the International Economic

01:11Emergency Powers Act? And the decision will largely turn on one phrase in this IEPA statute, the phrase

01:21that says that says that the Congress delegated the authority to regulate importation or exportation.

01:28And so the issue is, can you read the word regulate to be the same thing as tax or tariff? And the argument

01:36that most people are making, that many members of Congress, that many of the business groups and many

01:41of the others that say the answer to that question is no, no, Congress did not hand over the authority, point to

01:48the fact that nowhere in this IEPA statute does the word tariff or duty appear. If the Supreme Court upholds

01:56what the president's done, then it's clear what happens. We keep charging the tariffs. What if it actually

02:01strikes it down? What is the remedy if in fact the court rules that these tariffs were illegal or

02:07unconstitutional? So if the court rules that the tariffs were illegal from the get go, then the then the

02:13tariffs must be refunded to those that have paid them. And if we look, you know, today through at least the end of

02:19August, that means about 88 to 100 billion dollars worth of tariffs would need to be refunded to the importers that

02:28paid those tariffs in the first instance, because if they're unlawful, then everyone is entitled to a refund with

02:35interest. Is there a mechanism for doing that? That sounds like an enormous undertaking. There is a mechanism, but you are

02:41corrected is an enormous undertaking. And it basically splits out into whether or not the the particular

02:47import of this particular item in this particular shipment, whether or not all of the paperwork that

02:53customs has to do about those has closed or not. In the end, does all this really matter? And we've heard

02:59from the administration, they have alternatives. I mean, you know, the numbers better than I do. Section 301,

03:03Section 201, Section 337. They have a lot of different routes that they can impose various regulations and

03:09tariffs under. Yes. And again, I do think it's very clear that the president loves tariffs. And so I

03:16think if the stream court strikes down these tariffs, I do think you will see the president take up a number

03:22of these other laws and try to reimpose tariffs. But for me, there would be a pretty important distinction

03:29between them. First of all, with the one exception of the statute that's called Section 122, that would

03:37allow the president to declare that there is an emergency because we are experiencing a major

03:42balance of payments problems or currency difficulties. That would allow the president to impose a 15%

03:50across the board tariff on goods from every country limited to 15% and limited to 150 days in length

03:58unless the Congress renewed it. All of the rest of the authorities that the president could turn to

04:03are going to be different than what he's done. In the normal course, we will likely get a ruling

04:08for the Supreme Court either later this year or sometime next year on this important question.

04:13At the same time, sometimes the court likes to, as it were, duck the problem. What are the routes

04:19available to the Supreme Court? Such as, for example, there's a dispute over subject matter

04:22jurisdiction. What are the chances the Supreme Court say, you know what, we don't need to decide this,

04:26we'll remand it for further proceedings? That can happen. To me, if the Supreme Court is going to try

04:32to take a little bit of an off-ramp, a little bit of a compromise, and again, I think you've clearly

04:38seen the Chief Justice try to find, is there some compromise? I think the compromise there may be

04:44in whether or not the court rules that there is no authority to do tariffs ever under IEPA, or whether the

04:52court takes, as it's a little bit of an off-ramp, a view that IEPA permits some tariffs, but potentially,

04:59for example, not the trade deficit tariffs. I mean, the court could, in essence, say,

05:04we could read this word regulate importation to permit some tariffs, but what the president did

05:10in imposing this worldwide tariffs as a result of the trade deficit, he cannot do, because the

05:16Congress has given him this separate authority under Section 122. The one thing that I think

05:21ought to give the court real pause about interpreting this phrase regulate importation or exportation

05:29is the fact that it is well established as a matter of law that you should read a word to have the same

05:37meaning within the statute. And in our Constitution, there is a ban on putting tariffs on exports.

05:44And the phrase within IEPA is regulate importation or exportation. So what the Trump administration is

05:53asking the court to do is to read that phrase regulate imports means tariff imports, but don't tariff

06:02exports, because that would be unconstitutional. And so they're asking the court to read that word

06:08regulate to have two entirely different meanings in the exact same phrase of the exact same

06:14statute. And that, at least to me, is a very tall order. So when I step back from it and say, you

06:20know, how likely is it that the court is going to say, yes, Trump, you can do this? I think the answer

06:26is, I think they're going to say no. And I think they're going to say no, largely because there are

06:32other statutes in which the president can impose tariffs. He doesn't need to twist and bend and

06:38torture this IEPA phrase in order to impose tariffs. And secondly, it is really hard to see how you read

06:46this one word regulate as having diametrically opposed meanings in the exact same phrase of the

06:53exact same statute. And yet that's what the Trump administration is saying that the court should be

06:58doing. The IEPA case is foremost one of law, but it could have enormous consequences for businesses

07:05and consumers. Former Treasury Secretary Larry Summers says the economic argument in favor of

07:11tariffs is hard to make. Look, I think the tariffs are unwise economic policy. I think on net, they push

07:20up prices. On net, they take money out of the hands of consumers, which slow the economy down. And

07:27they're in that sense, a self infected supply shock that makes the Fed's job makes everybody in the

07:34economy's job harder. So I think they are for the most part, bad policy. I don't think we've used

07:41them successfully to get important other benefits from other countries. And so the world will be better.

07:51The United States in particular will be better off. Indeed, the American manufacturing sector

07:56will be better off without these tariffs. The two magic words in the statute, extraordinary and

08:01unusual, it says, is what we need to do to declare this national emergency. That is at least largely a

08:06factual question. How extraordinary or unusual are these balance of trade deficits, which the president

08:11invoked? As an economist, how unusual are these trade deficits? I mean, I want to be fair, David,

08:19and recognize that there have been a lot of emergencies to find over time for a lot of different purposes,

08:26not all of which would be the kind of thing that if they happened in my family, we would call

08:31an emergency. So I think we do need to pay attention to the statutes and the history as well as that. And

08:41that's what the lawyers do and what the Supreme Court will deal with. But if you ask, is the United States in

08:51some kind of unprecedentedly disastrous situation of borrowing that is related to a lack of tariffs?

09:01The answer is absolutely not. If you ask the question, according to economics, are tariffs the right

09:10response to a foreign borrowing emergency? If there was a foreign borrowing emergency, the answer is no.

09:19The right measures would involve reducing the budget deficit, increasing the country's level of

09:25savings, for example. So I think it's pretty difficult to say that there's some aspect of the economic

09:34situation that's present today that hasn't been present for most of the last 25 years that would

09:42justify the invocation of emergency. However, we got here, we certainly have a large and growing

09:50deficit and debt. One of the arguments that President Trump is making is these tariffs are

09:55helping us with that. It's bringing in revenue to reduce that debt and deficit just on that limited issue. Is he

10:01right? The tariffs certainly are bringing in revenue, not nearly as much as he said they would and not. And I don't

10:11think the forecasts the administration makes that they'll get a trillion dollars of revenue over the next year or two are

10:18likely to pan out. But yes, they are bringing in revenue. But they are also having other effects. They're holding

10:28interest rates higher than they would otherwise be. They are also slowing the economy. And those things make the

10:36deficit position worse. So I'm not sure that there's an important improvement in the budget deficit as a consequence of

10:46these tariffs. And certainly if you think of the budget deficit as some kind of emergency,

10:52these tariffs would be a very odd response to that kind of emergency.

Category

Transcript

Be the first to comment

Recommended