New Tariffs Challenged & NFL Antitrust Investigation

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1:43June Grasso:This is Bloomberg Law with June Grosso from Bloomberg Radio. A group of small businesses and mostly Democratic-led states are urging U.S. trade judges to toss out President Trump's latest global tariffs, arguing they were issued under a law that became outdated when the U.S. ditched the gold standard decades ago. The case involves Trump's use of Section 122 of the Trade Act of 1974 to place a 10 percent tax on imports. Trump issued the tariffs under that section, which had never been invoked before, after the Supreme Court on February 20th overturned his earlier global levies based on a different law, the International Emergency Economic Powers Act, or IEPA.

2:36My guest is trade expert Timothy Brightbill, a partner and co-chair of the International Trade Practice at Wiley-Rhine. Tim, give us the lay of the land right now for companies and industries paying tariffs on imports. As you know, the Supreme Court has struck down the first set of tariffs under the International Economic Emergency Powers Act, or IEPA, And more than 3 ,000 companies have now sued seeking refunds of those tariffs. In the meantime, President Trump put in place new tariffs under Section 122 of the trade laws. Those are tariffs of 10 % that are now being collected on our trading partners.

3:25President Trump had hinted that he might increase that amount to 15%. But for right now, they are 10%. So that's the current state of play with companies seeking refunds of the first tariffs while the administration is collecting these new tariffs under Section 122, which has itself been challenged in the courts. The Court of International Trade heard three hours of arguments on Friday from a small group of businesses in 24 mostly Democratic-led states asking the judges to toss out those tariffs. So tell us about the challenge. Yes. So this was a challenge filed by a number of Democratic attorneys general, as well as businesses that have been paying these tariffs under Section 122.

4:14The challenge is at the Court of International Trade, where all trade disputes are heard, and a three-judge panel of the court, which is somewhat unusual. Normally, a single judge will handle appeals. But on this case, like the IEPA case, there were three judges that heard argument on Friday. And the challenge is targeted at Section 122, which allows the president to take action to address fundamental international payment problems. And the law specifically mentions special import measures to deal with large and serious U.S. balance of payments deficits. Now, this is a law that was passed in 1974 and has not been used.

5:02So this is the first time it has been used by any president. And it does specifically allow the president to impose a temporary import surcharge or tariff of up to 15 % for a period not exceeding 150 days. So that would be until about July 24th. So again, this has been challenged by a number of Democratic state attorneys general, as well as importers that are paying the tariffs right now. And that was the argument that took place on Friday. So what are the Democratic state attorney generals saying about this? Why do they say it should be tossed out? Yeah, so their challenge is that the United States does not have a balance of payments deficit.

5:49Although we do have a large and persistent trade deficit, that a balance of payments deficit is different. And in fact, the administration, when it justified using the law, talked about large trade deficits. But we don't have a large and persistent balance of payments deficit because we have a floating exchange rate. So economists would say, and the parties challenging the law would say that the overall balance of payments always balances out because the trade deficit is offset by foreign investments. So we have a financial account surplus to offset the trade deficit. So that is their main argument, is that we don't have a balance of payments deficit at all.

6:33We just have a trade deficit, and that is different. And therefore, the use of Section 122 is not appropriate. The attorney for the Justice Department said he didn't know what the current balance of payments deficit is today. Is that important that he couldn't come up with a number? I think it's relevant, but I think his argument focused, and this was a three-hour argument, it was very technical in nature, but his argument focused on the fact that trade deficits were always an important part of the balance of payments deficit. That was true in 1974, and it's still true today. So whether we have a small current accounts deficit or none at all is, in their view, less relevant because we have a persistent trade deficit, which is an important component of the balance of payments deficit as it was decades ago.

7:30So the panel included two judges appointed by former President Barack Obama and one by former President George W. Bush. Did you get a read on how they might rule? I don't think there was a good sense. I expected going in that the three Court of International Trade Judges would be very skeptical of President Trump's ability to impose these tariffs, particularly because the administration's justification was based on large and persistent trade deficits. But during the hearing, I think the judges admitted this is not an easy case. Judge Stansu in particular said that he and his colleagues were not quite sure how to translate 1974, when the law was enacted, into 2026.

8:19But he also did say that it's clear that a balance of payments deficit is not the same thing at all as a merchandise trade deficit. So I think what is less clear is what balance of payments deficit meant back in 1974. And so a lot of the questioning from all three judges focused on the words of the law, how it was enacted in 1974, what it might have meant or what Congress intended at the time. So do you think that this case will end up at the Supreme Court like the IEPA case did? I think it's likely that there will be appeals. If the plaintiffs win, the United States will almost surely appeal.

9:02and if the United States wins, it's a little less clear that the importers will appeal, but I think the Democratic Attorneys General probably will. Now, in either way, if there are appeals, they would go first to the Federal Circuit in Washington and then to the Supreme Court, and I still think it's unlikely that the appeals would be done before the Section 122 tariffs expire on or about July 24th. At that point, those tariffs would have to be reauthorized by Congress. And I think it's unlikely that Congress will take that action, given that we're coming up on midterm elections and the tariffs are not universally supported and have opposition even from some Republicans.

9:51So I haven't been keeping track of what Trump has been doing with tariffs, I'll confess. But after the IEPA decision by the Supreme Court, we talked about, you know, the different ways Trump could enable tariffs. I mean, has he used any of the ways that are, you know, straightforward and clear? If there are any, I don't know. Sure. Well, yes, the president is already preparing for the possibility that the Section 122 tariffs will either expire or be struck down by the courts. And so the Trump administration has initiated a series of investigations under Section 301 of the trade laws. Section 301 is the same law that was used by the first Trump administration to impose tariffs on hundreds of billions of dollars of goods from China.

10:44And those Section 301 tariffs are still in place. Section 301 only requires that there be barriers, trade barriers that burden or restrict U.S. commerce. And so the administration, through the U.S. Trade Representative, has begun a number of those investigations, particularly looking at two issues. One is overproduction and overcapacity of certain goods in particular countries. And the second one is forced labor and whether or not countries have laws preventing the use of forced labor in an even larger group of countries. So both of those are underway with very tight timeframes. And those investigations mean that President Trump has this additional tool he can use to put tariffs in place, even if the courts take action against the current tariffs.

11:43So the Court of International Trade is also hearing cases on the IEPA tariff refunds. I mean, where do those stand? Yes. So those are progressing well. And in fact, Customs and Border Protection has announced that it will set up this electronic system to do tariff refunds. It's called CAPE or Consolidated Administration and Processing of Entries. And so Customs has announced that it will launch the first phase of this CAPE refund system next Monday, April 20th. Now, it's somewhat limited in scope. The first phase of refunds that can be applied for, it covers recent entries and recent tariffs that have been paid but not finalized.

12:35It doesn't cover older tariff entries yet. But the process is underway. Customs has been building this automated system. The courts have been monitoring it with almost weekly reports. And in fact, there's another progress report due to the Court of International Trade tomorrow or April 14. So at least some importers who paid the IEPA tariffs should have a way to file for those refunds relatively soon. Is there any answer yet to the question of whether individual, you know, Americans and any other entities that paid higher prices because of the tariffs can get their money back if the direct importers get refunds?

13:22There's no answer to that yet. And of course, wherever there's a lot of money involved, there will be lawsuits behind. So you do have the companies that are importers are entitled to file for refunds, but it doesn't necessarily mean that consumers will get money back that they paid in the form of higher prices for goods. We've already seen some class action lawsuits filed, for example, one against Costco, which was one of the first companies to challenge President Trump. Well, now the customers at Costco are saying, well, if you get a tariff refund, we want our money back as well. But no, there's not going to be a quick resolution to that issue.

14:03And it's also much more difficult to figure out what consumers paid and how much more they paid as a result of the tariffs. That's not as easy as an automated refund system where the amounts paid by importers were automatically tracked throughout this whole time. Back to Section 301, how many countries are affected and what's happening next there? Yes. So the investigations cover 27 countries that the Trump administration is investigating for overproduction or overcapacity in certain sectors, whether it be metals or consumer goods, wood and lumber products, solar products, 27 countries total. And then the forced labor investigations cover 60 countries total, so an even bigger group that may not have forced labor laws that are as strict as the United States.

15:02And, of course, it's really important to prevent the import of goods that are made with forced labor. So deadlines are coming up there, too. The deadline is this Wednesday, April 15th, for any company or group that wants to file comments with the U.S. trade representative or also wants to request testify at hearings that will be held. And those hearings will begin April 28th on the forced labor Section 301 investigation and May 3rd on the overproduction or overcapacity Section 301 investigations. So we expect that dozens, perhaps even hundreds of companies will file comments and may request to appear at these multi-day hearings that USTR will hold in the very near future.

15:53This seems never ending, Tim. Yes, it's been a very chaotic year and four months already. And it will remain controversial and will remain something that changes on a day to day basis. So companies and importers have to protect their rights and they have to monitor the news very carefully. And, you know, when tariffs are the favorite word in the English language of this president, you expect that there will be continued actions going forward. So we're just monitoring this as closely as we can. Thanks so much for joining me today, Tim. That's Timothy. This message is brought to you by Apple Card.

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18:57Sample prompts are for illustrative purposes only, not investment advice. All investing involves risk of loss. See complete disclosures at public.com slash disclosures. The Justice Department has opened an antitrust investigation into the National Football League, according to Bloomberg sources. The investigation is focusing on the broadcasting exemption in the Sports Broadcasting Act and the leverage the NFL has to extract higher prices, which get passed on to consumers. On its part, the NFL says its media distribution model is fan and broadcaster friendly, with over 80 % of its games on free broadcast television.

19:38Joining me is antitrust law expert Harry First, a professor at NYU Law School. Harry, tell us about the antitrust exemption that the NFL has.

19:49June Grasso:Yeah, this is an old statute, 1961 Sports Broadcasting Act. It came out of some litigation that actually the Justice Department had brought over efforts by the NFL at the time to restrict broadcasting of their games. So basically to protect live attendance at home. So they put on various restrictions and there was some litigation. And the upshot was that the NFL got this exemption from Congress for getting together and jointly licensing their broadcasting rights to television broadcasters. And that's the way the world looked. And that's the way it was in 1961. Quite different now. Quite different.

20:39Yeah.

20:40June Grasso:in so many ways, not just the technology, of course, but the economic powerhouse that the NFL has become. I mean, I guess home attendance is important, but financially, I can't imagine that this is the key driver of success that football thought it was both professional and amateur, quote unquote, amateur. At the time, we're trying to do the same thing. Republican Senator Mike Lee, who chairs the Antitrust Committee, in a letter where he asked the DOJ and the FTC to review the exemption, said that during the past season, to watch every NFL game, football fans spent almost$1 ,000 on cable and streaming subscriptions.

21:23I mean, it's a different world because you have all these streaming services now.

21:28June Grasso:I guess my reaction is if someone's spending a thousand bucks to watch every NFL game, they are getting what they deserve, which is some sort of shock to the system. Yes, I mean, maybe there are some fans who do that. I have no clue. My guess is not everybody does this. So a little hyperbole there, but so maybe that's an outside figure. You know, we could also ask what fans spend for season tickets, you know, and all sorts of other things that they spend money on. So, yes. But the senator's point is in some sense a valid one. Obviously, the technology has changed. And, you know, you can look at that in various ways.

22:12June Grasso:You can say, oh, my God, people are spending a lot of money. Or you can say, oh, my God, people sitting in New York and watch a game that's going on on the West Coast today. And they couldn't in the past because the technology didn't, you know, there wasn't any technology for that. So is the NFL supposed to figure out what subscribing to each of these services would cost consumers who want to see every single game? Everything is more expensive now. Do consumers have some kind of right not to pay so much to see every game? Would that it were so. So you've hit a really good legal point. The thing that upsets consumers, obviously, in many antitrust cases is high prices.

22:58June Grasso:And the thing that allows firms to charge high prices is that they have power in the market. And the antitrust laws are intended to have competition to push prices down, not to allow firms with market power to raise prices as they will. So in that sense, yes, this is sort of the core of antitrust. On the other hand, and there's always another hand, charging high prices in itself is not a violation of the antitrust laws. It may be if you agree with your competitors on what those prices are. So that's sort of maybe what's going on here, but not quite. So fixing prices is a problem, but it's a problem because they're fixed, not necessarily because they're high.

23:49The Justice Department is focusing on that exemption. What kind of things do you think they'll look at? Isn't it pretty much out in the open what's been happening?

23:59June Grasso:So one of the things that's interesting, of course, is that we don't really know what this investigation is or how this one happens to be leaked as opposed to other things that the Justice Department is doing. So you have to wonder a little bit about exactly what's going on because we don't really know what they're looking at. So one of the things may be that not everything that the NFL is doing is covered by the exemption. So this only covers agreements that involve the joint licensing of broadcasting rights to over-the-air television. So there's a lot of licensing that goes on now, or more and more, involving streaming services, which is what Senator Lee talked about.

24:45June Grasso:Now, that's not covered by the exemption at all. So it's unclear what the interaction may be between... It was obviously an economic interaction between the two, but what the legal interaction is is a little unclear. So the Justice Department may be exploring simply what's being done that may affect those agreements that are not exempt under the Sports Broadcasting Act, but that are subject to, you know, straight up antitrust law, in which case the NFL could have a problem because depending on how the contracts are written. So there may be a lot to investigate. The Justice Department might call for, you know, removing the exemption, although they don't usually endorse legislation.

25:33ESPN reported that Fox was behind the lobbying effort that led to the federal investigations.

25:41June Grasso:Well, first of all, the Wall Street Journal broke the story about the investigation. That's one. And two, the editorial board of the Wall Street Journal came out against this exemption, the Sports Broadcasting Act. So, number three, Fox is one of the broadcasters that carries NFL games and that the NFL is pushing to sort of tear up the current contract and renegotiated a higher, you know, paying the NFL more money. So Fox has an obvious economic self-interest. And, you know, that's shocking, but true. They're potentially being held up for these higher fees. Not a consumer right, as we pointed out.

26:32June Grasso:But, you know, they don't want to pay more money, which is interesting, which means that, you know, they can't just quite pass it all on to the advertisers. You know, they're facing some limits, too. So, yeah, so they're upset about it. Stay with me, Harry. Coming up next, the jury is still out in the Live Nation antitrust trial. I'm June Grosso, and you're listening to Bloomberg. And that's it for this edition of the Bloomberg Law Show. Remember, you can always get the latest legal news on our Bloomberg Law podcast. You can find them on Apple Podcasts, Spotify, and at www.bloomberg.com slash podcast slash law.