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

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1:09Bloomberg Audio Studios. Podcasts. Radio. News. This is a breaking news update from Bloomberg. Instant reaction and analysis from our 3 ,000 journalists and analysts around the world. The U.S. 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 us here, Washington correspondent. Tyler, give us the latest on what we know about this Supreme Court ruling. So it appears that the court in a 6-3 decision struck down President Trump's tariffs, those broad based ones that have to do with IEPA, the International Emergency Economic Powers Act.

1:53The president put forward IEPA tariffs on two accounts. One was those fentanyl-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. Case is 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 IEPA 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.

2:33The other question was about whether or not he actually invoked IEPA correctly, if he's able to, by declaring these national emergencies. Did those national emergencies related to fentanyl, related to these trade imbalances, reach 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 objectives? his objectives. We're still reading through this, but it appears that we have one at least dissenting opinion was from Kavanaugh, 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.

3:26But that process is likely to be a mess, as was acknowledged at oral argument. 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 &P 500. It did shoot up. It's come back a little bit. But what's notable here, Paul, is that the best performing group among 24 groups is a consumer durable and apparels group. Lululemon, for instance, jumping about 5 % right at the open. It's paired some of that advance to 2.4%. Lululemon, along with other companies, presumably hurt by these tariffs would benefit, therefore, with the removal of these tariffs.

4:03Although, 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 News also reporting that hundreds of tariff refund lawsuits pending in U.S. trade courts. 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, IEPA tariffs have been collected from more than 301 ,000 importers.

4:41And 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 the 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 232 related to national security, for example. Those IEPA broad-based tariffs brought in last year more than$134 billion for the U.S. 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.

5:24There'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 statute of limitation that a company can ask for its money back. That's 314 days. So some of those tariffs imposed on China have actually been imposed longer than that. So those companies want to get those back. But by and large, I think we're still within that time frame for these companies to ask for those requests. And just a quick mention, equities building on their advance a little bit with the S &P 500 now up a third of one percent.

5:59Treasury yields are higher. And the thinking is the removal of tariffs would leave a budget hole that we know already surpassed$130 billion 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 refunds 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's 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 telegraph from the administration that they're going to pull on these other federal authorities.

6:41Some of them are already in place. We talk a lot about Section 232, those national security tariffs that the administration has put forward on some of those critical sectors, steel, aluminum, 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 301 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 338 that hasn't been used since the 1940s.

7:20I also have Section 201 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 that 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 15 % ceiling, for example, whereas we know the president in some cases has threatened tariffs, you know, 50 % and onwards. And also, all the different sections that you cited, most of these tariffs can't be imposed instantly.

7:53There'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 232 investigation on average takes nine months to complete. Yeah. 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 information behind them that they could make the determination that this, you know, meets the national security concerns or the unfair trade allegations to put on their terrorists.

8:33But 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 in New York. 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 when it could have come out with this decision. Tyler Kendall, Bloomberg's Washington correspondent on our way back to D.C. this afternoon. Thank you so much. Thank you. All right, let's go to June Grosso right now, Bloomberg Laws host.

9:04She 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 in the majority to say, you know, this was a unanimous vote. But otherwise, you know, it doesn't really matter. It's six to 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.

9:44And so people were wondering what was taking so long. Well, what's taking so long is it's 170 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, IEPA, that no other president has used to impose tariffs. And under this statute, there's a word called 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 justices, 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 what the words of a statute or the words of a constitution mean.

10:33So 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 the oral arguments that there were enough votes, particularly the chief justice. And the chief justice wrote this opinion. I'll just note that when I predicted that, because whenever there's a big opinion that he's in the center, he writes it. He wrote 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 acts committed, criminal acts committed in office.

11:16He 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. 170 pages. 170 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, one of the dissenting justices, described the refund process.

11:55It 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 kicking 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.

12:35That'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. Oh, I see what you're saying. So they'll be at the State of the Union. The chief always goes. Elena Kagan goes. Usually Sotomayor 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.

13:08I don't know. And Justice Gorsuch 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 head. So I was wrong about that. And I 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.

13:48Yep, absolutely. And we'll certainly given this is the signature economic policy that he has really defined his administration. Right. 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 been well, because they've been ruling so much in his favor on the emergency docket, he's been very complimentary about the court. But we'll see what happens. I doubt that's going to last. All right. We'll stay on top of the president's social media output here today. June Grasso, thank you so much. We appreciate it.

14:17June Grasso, Bloomberg Law host here, joining us here for this momentous decision here that U.S. Supreme Court struck down President Donald Trump, sweeping global tariffs, undercutting his significant economic policy and delivering his biggest legal defeat since he returned to the White House. that is according to Bloomberg reporting. Scarlett Foo and Paul Sweeney live here on our Bloomberg Interactive Broker Studio. I'm looking at the top live. Again, great, great reporting real time on this breaking story. Sean Donnan, senior economics writer, he writes, it's not overstating things to say this is a historic decision that applies on at least two fronts.

14:53Number one, the policy at issue. Trump's increase in tariffs last year was the largest since the infamous 1930 Smoot-Hawley duties. Number two, its application, the presidential powers over the economy. Scholars in the lead up are calling this The biggest case in economic policy realm since the Youngstown Steel case in 1952, in which the court blocked Harry Truman's bid to nationalize steel mills during the Korean War. Others have likened the idea of Supreme Court rebroking Trump on tariffs to the court's fight with FDR over the New Deal. So a lot of historical context there. Certainly a huge landmark decision by the Supreme Court determining that President Trump's global tariffs are illegal.

15:33Let's bring in Henrietta Trays. Henrietta is our go-to expert on all things policy and economics. She is the managing partner and director of economic policy at Veta 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. We fought against specifically a taxation power that Congress did not have any say over.

16:13So 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 can see that investors were very prepared to rip the retail stocks. Everybody who's been exposed to the 40 percent trans shipping tariffs, the ad hoc 50 percent tariffs on Brazil, the wide ranging threats of 200 percent tariffs on French wine that have just been spewing out of the White House for 12 months now. So it's really an exhilarating day, an incredible day for the Constitution, in my opinion. Henrietta, is this, do you think, emboldened 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?

17:02Is there any reason to believe that? Absolutely. I think there's two ways to look at this. First of all, this is exceptional 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 122, that give him the ability to impose tariffs at a 15 percent rate for the next five months. If he wants to do that, he can go ahead on.

17:33But the American public will be very grateful that the Supreme Court struck these tariffs down and even more grateful if he keeps them off. So that's one way of looking at it and Republicans on Capitol Hill are staring down the barrel of a very ugly affordability narrative election cycle where we've seen races as diverse as Texas swing 31 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 U.S. economy. It's influenced not just the traditional independent voter that we are always concerned with, but also with young male and Hispanic voters who have driven the president to his second term.

18:15So 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 4.4 percent in European trading. So companies that rely on exports to the U.S. also benefiting from this ruling. Paul asks a really important question, Henrietta. Basic. It's very basic. Are tariffs 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.

18:50That 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. 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 10 percent in the case of the U.K. or 19 percent in the case of Indonesia. Those tariffs are illegal. The Supreme Court has told the Customs and Border Patrol people this authority is not permitted.

19:25So it's the importers who are going to rise up and say, I'm not paying. It doesn't matter what the countries independently decide or whatever the White House says. So what do we expect this administration? How do you expect the president and administration to respond to it? 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 described on Section 122 is just one of the many alternates and alternatives that the president has. Section 301, which is, you know,$350 billion worth of tariffs on China.

20:04We could re-up that and apply it to the EU, the UK or Brazil. 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 15 percent tariff rate under Section 122? Does it exist now? When's the president going to put it on? What do I need to worry about with the national security tariff? 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 IEPA and move into new and different authorities.

20:45I think it would be extraordinarily disruptive. And again, with my eye on the election cycle and the 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 EBA so far. So I don't think these tariffs will ever come back at their current level. And I think they 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.

21:20It's really going to start focusing on, especially with the midterm 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 U.S. economy. None of that is true. We just saw a very soft GDP print. We see that manufacturing jobs have lost 72 ,000 in the last year since Liberation Day. We see that prices have increased across a lot of the retail space.

21:54That'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 in 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, you know, the housing agenda that they have.

22:31I mean, it's not realistic to think that a 50 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 tariff front. 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 Tray is managing partner and director of economic policy at Aveda 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.

23:07He 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 Henry de Trez what the response will be from President Trump, whether he will let this kind of fade away or whether he'll use some of the other options that he does have. Many, many different alternative options, including filing for Section 232, 201, 301, 122, 338. Oh, boy. Yeah, there's a lot. Exactly. All right. We welcome Welcome back to our studios, June Grosso, Bloomberg's legal analyst here.

23:44June, now you've had a couple more minutes to look at this 170-page ruling. Don't do that to me, Paul. Don't do that to me. So, I mean, it is. I mean, we're just reading some of the reporting on Bloomberg Live, really calling it 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 criticized 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, there are just a couple of cases where they didn't allow him to go forward with his agenda on the emergency docket.

24:25So here you have this enormous case on his 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 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.

25:11He's a partner at Dorsey and Whitney, trade attorney. Dave, 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. So is there anything, and I know you haven't gotten through the whole opinion, but is there anything that surprised you about this opinion?

25:55One 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 IEPA authority had exceeded what IEPA was intended to permit. And the Supreme Court, it looks to me, went one step further and said that the language of the statute doesn't permit tariffs full stop. So, David, what's the 6-3 vote mean to you, if anything? Is a win a win or is a 9-0 better than is 6-3. How should the market think about that? Yeah, I mean, I think a win is a win, right?