Trump’s Global Tariffs Struck Down by US Supreme Court

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2:25Tim Stenovec:The Bloomberg Businessweek Daily Podcast with Carol Masser and Tim Stenebeck on Bloomberg Radio. We head to D.C. Bloomberg News Supreme Court reporter Greg Storr was listening to President Trump as well. He is in the Bloomberg News Bureau in the nation's capital. Greg, it's a big day. We kind of expected this outcome, but I don't know that we expected the decision today, but exactly what was the decision and the significance of it? Walk us through it.

2:52Carol Massar:So the significance is that the main, the pillar of the tariffs that the president has been imposing over the last year does not give him tariff authority, the Supreme Court said. It knocked out more than half of the tariffs that Donald Trump has imposed since returning to office. The Supreme Court said that statute, which gives the president certain powers during economic emergencies does not include the tariff power. And that was sort of the fundamental dividing point. The dissenting justices said, yes, it does. Now as the president suggested, there are other tariff authorities. He's going to try to invoke those as much as he can.

3:31Carol Massar:But those do tend to be more cumbersome, more limited. And so we'll see just how much he's able to replace the tariffs that have been struck down.

3:38Tim Stenovec:Where does this go next? Is this ever coming back to the Supreme Court? or are the next steps here really going just back to lower courts?

3:47Carol Massar:It's really going to be the lower courts. There will be big fights over refunds in that press conference. The president said he expects that to be litigated over a matter of years. It's not yet clear what argument the administration has against refunds for the$170 billion that have been paid in these tariffs under this law, but it sounds like they are prepared to at least make some of them. So that will be a big fight. And then we may well have future fights over these other laws, including the one that the president said he is going to use to impose that 10 percent global tariff. That's a more limited authority that is supposed to extend only for 150 days.

4:25Carol Massar:There may be questions about the exact parameters parameters of what Donald Trump can do under that law.

4:32Tim Stenovec:I am curious to Greg about what the president said about foreign influence of the Supreme Court. And he said, in my opinion, the court has been swayed. What is your read on that? And what is he maybe insinuating?

4:48Carol Massar:It's a bit of a head scratcher. You know, the president, of course, has always said that these tariffs are paid by foreign countries, not by U.S. importers. Well, U.S. importers have made very clear in suing over these things that they're the ones who are paying for them. And so that is perhaps what he's alluding to there. Certainly no evidence of that that I've seen in the opinion that it was anything other than their interpretation of what the law and the Constitution require.

5:15Tim Stenovec:I'm wondering, you know, this decision, the six to three decision, what kind of clarity does it give us about just how much power the executive branch has? Because, of course, right after the decision, we have Trump coming out and saying, you know, floating another 10 percent global tariff.

5:30Carol Massar:Yeah, well, so kind of two halves to the answer. One half is the president is right. He has other authorities. And the Supreme Court didn't say you couldn't put in place any tariffs at all. You just can't do it using this law that the president has used so far up until now to basically impose tariffs for any reason at all that he wants. So in that sense, it's narrow. But the court also, in a section that was joined by two Trump appointees, Neil Gorsuch and Amy Coney Barrett, and also the Chief Justice John Roberts, talked about Congress's tariff authority, Congress's taxing authority, and said that unless Congress has clearly handed over that power to the president, we're not just going to assume that the president can do something.

6:19Carol Massar:There are actual limits to what he can do. And the court invokes some of the opinions it used to roll back, to trim, to knock out some of Joe Biden's initiatives. So the court, at least three Republican appointed members of the court, as well as the liberals, were trying to send the message that, hey, we are putting some real limits on what this president, like all presidents, can do.

6:41Tim Stenovec:Yeah, I love that question from Emily and what you just said, Greg, because I do think about, you know, what the president, you know, we've talked so much about the expansion of the executive branch and of presidential powers in the second term of a Trump White House. And it does seem like this president, many would say, can do just about anything. Right. We've seen a Congress that's very quiet, a Republican led Congress. But having said that, how do you read the tea leaves on a Supreme Court that has been seen to be very sympathetic and maybe even political, some would say, to President Trump specifically and his policies to make this ruling?

7:22Tim Stenovec:Or did they not really have any choice based on it was pretty black and white in terms of the law?

7:28Carol Massar:Well, certainly important to emphasize, as you alluded to, that over the past year, the Supreme Court has let Donald Trump do an awful lot of things that he wanted to do. Most of them only on a temporary basis, letting him fire people, letting him not spend money, letting him end immigration programs. And, you know, that's still a reality that the court is being pretty deferential to Donald Trump in a lot of areas. But these were totally different legal questions. As I said, the Constitution says the tariff power is Congress's. And the court was looking at this case as a separation of powers case, unlike the other ones that it had been dealing with.

8:08Carol Massar:And this is a place where, from the court's perspective, Donald Trump just went too far. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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11:21Tim Stenovec:you're listening to the bloomberg business week daily podcast catch us live weekday afternoons from 2 to 5 eastern listen on apple carplay and android auto with the bloomberg business app or watch us live on youtube we're going to stay with this story and we touched on some of this certainly from the press conference uh with the president there at the white house but also with Greg. And we want to get into maybe a little bit more of what we are hearing from that press conference, after that press conference, what's going on inside the White House. And for that, we want to get to Bloomberg News White House correspondent Kate Sullivan, who just ran to the microphone there on the north lawn of the White House.

12:01Tim Stenovec:Kate, good to have you here. You're in the room. Tell us a little bit about what that felt like on what is certainly got to to be, I think, safe to say the president's got to be feeling a big defeat with what is a major policy of his second term here in the White House. Absolutely. So we just wrapped that press conference and we saw a very defiant Trump at the podium. You know, there's a lot to unpack from that press conference. But some of the top lines are the president has said that he would be signing new orders to impose tariffs to replace some of these tariffs. He talked about using Section 122 to impose a 10 % across-the-board tariff.

12:43Tim Stenovec:Also talked about Section 301, which applies to unfair trade practices. I asked the president about whether this meant that he would now be asking Congress to take additional action when it comes to tariffs, and if he'd spoken to Leader Thune about this. I thought it was really interesting. He said, I don't need to. I'm not going to do that because I don't need to. I felt like the the top line from the president was we're still going to have tariffs, but they're just going to look a bit different. And I thought it was interesting. He talked a lot about certainty. He kept repeating the word certain certainty, saying that for a very long time, we were waiting to see how this decision was going to play out, what was going to happen.

13:20Tim Stenovec:And we were living in sort of a limbo period. The White House was. And now at least they they know what has happened. They have some certainty and they think that that should inspire some confidence and really sort of now dictates how they're going to move forward with this. When Trump does move forward, there's a great piece on the Bloomberg terminal right now, the quick take about just all of Trump's legal options that he has after the Supreme Court said his tariffs are illegal. What will those look like in practice? Are the tariffs that Trump would potentially introduce under these new laws going to be as expansive as what we had seen last year post-Liberation Day?

13:58Tim Stenovec:There were several reporters in the room who were trying to press for more specifics on what exactly this would look like, what exactly the rates would be. The president kept saying, I can do whatever I want. So we don't have those specifics yet. We are, you know, obviously this has just happened. The White House is still responding to this. We heard a lot of broad top lines from the president today about how he's feeling about it, what he's going to do. But there are still a lot of questions. And he was asked, for example, about the refunds, whether the administration now needs to refund all the billions of dollars in revenue that they've collected from the tariffs.

14:37Tim Stenovec:And he said the court didn't didn't weigh in on that. He sounded frustrated that they did not weigh in on that particular part. And so we still don't know. He said that that would be playing out in courts. And like a lot of this, I think this this is still going there's still a lot of unresolved questions. And this is still going to be playing out for quite some time. You know, Kate, looking at Section 301 and 232, 232 is national security reasons for maybe imposing tariffs. 301 seems to give the Section 301 seems to give the president a lot of leeway to impose tariffs. I mean, it sounds like he still has a lot of levers that he can pull if he deems that it's important for the United States, national security or otherwise.

15:19Tim Stenovec:Absolutely. I think national security has been all within the laws, I guess what I would say, all within the law. All within the law, yes. The president has been talking about how tariffs are critical to national security. That's been a key part of his argument. I think we still have to see how this is going to play out, what he's going to do next. But definitely, I think another part of this is how is this going to affect the trade deals that have already been struck? He talked about that briefly in the press briefing room today, saying that some of them are going to have to be reopened. Some of them are going to have to be renegotiated.

15:53Tim Stenovec:but that a lot of them can still stand. He was asked specifically about India. He said, India is the same, that will stay the same. But I think there are still a lot of questions about how exactly he's going to use, you know, when it comes to these particular sections that he laid out, how that's going to be implemented in practice.

16:23Tim Stenovec:watch us live on YouTube. So we want to see what our next guest has to say about all of this. Olu Sanola is head of U.S. economic research at Fitch Ratings. He's responsible for coverage of U.S. economics, and that includes the labor market, consumer spending, inflation, demographics, and so much more. He joins us here in studio. Olu, great to have you here with Emily and myself. What matters the most to you as someone who keeps a watch on the U.S. economy? Is it that Supreme Court ruling and pushback on President Trump's tariffs, who he has said he's going to find other ways to do this? Or is it all the economic growth, kind of the mixed messaging, maybe to some extent, on inflation a little bit hotter than we thought, and growth a little bit weaker?

17:05Carol Massar:Yeah, thanks, Carol, for having me. It's good to be back. I think if you had asked me this question at 10 a.m., obviously I would have said, yeah, it's the GDP print, the inflation print, particularly the inflation print, just because it was quite hot. But, you know, fast forward the last couple of hours, clearly the Supreme Court decision is very, very important. The uncertainty that he brings to the table, you can't run away from it. In as much as we thought, tariff risks, tariff-related risks were receding. It's come right back. So, yes, the president has imposed the 10 % blanket. I still have to figure out if that 10 % is truly a blanket.

17:50Carol Massar:Or are we going to exempt pharmaceuticals? Are we going to exempt oil and gas? Which sounds to me like what they will do. But I don't know at the moment. I don't think it's clear. So when we see that executive order, we will find out.

18:04Tim Stenovec:You have in your notes that you're calling today Liberation Day 2.0. Of course, we had Liberation Day last year. It was a big market moving day as well. you link this though to optimism. Are you still optimistic that this is going to be good for the U.S. economy, particularly in light of Trump floating 10 % tariffs?

18:24Carol Massar:I do think that compared to, I would call this echoes of Liberation Day, right? Not quite seismic as Liberation Day was. The markets are not down, what, 10 % or 5%.

18:35Tim Stenovec:Which we've been talking about feels kind of telling.

18:37Carol Massar:Yes. But I do think that to the extent that we have the 10%, if the administration follows through with all of the exemptions, it's going to be fine because effectively it will be lower than what we had before. If it's a blanket, that means collections will be slightly higher. So that is, I don't think most companies have planned for that in terms of all of a sudden they have to pay more in tariffs. So I think that would bring some level of uncertainty. The other point is it's just for 150 days. What are they going to replace it with? It's most likely going to be more sector-focused. So sector-focused by nature would affect some countries a lot more than others.

19:22Carol Massar:So that brings a lot more uncertainty. It's probably going to affect pricing decisions, CapEx decisions, and the likes. I don't think that's what the economy needs at the moment. because this is an economy where if the government gets out of the way, the tailwinds are actually quite strong. So you have to now think this may be a little bit negative because the economy on its own was relatively resilient.