The Supreme Court battle over Trump’s tariffs

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0:36Natalie Sherman:It's no exaggeration to say that President Trump loves tariffs. And since he's returned to the White House, he's imposed sweeping tariffs on imports from countries around the globe. But on Wednesday, here in Washington, the Supreme Court will hear a case that threatens that favorite foreign policy of his. I think it's one of the biggest decisions in the history of the Supreme Court. The big case in front of America's highest court is not just about trade and tariffs. It's ultimately a test of presidential power. From the BBC, I'm Asma Khalid in Washington, D.C., with Tristan Redman in Paris. And today on The Global Story, the fate of President Trump's tariffs hangs in the balance.

1:36Natalie Sherman:So, Tristan, you know that before I started hosting this show with you, I used to cover the White House for NPR. And a good chunk of my time over the last several years was spent covering economic policy and specifically trade and tariffs. And this week is a big week here in Washington, D.C. for trade and tariff news. So I hear. There's a major Supreme Court case this week where President Trump's tariffs are on trial, essentially. And we're going to get into that all later in this episode. But I think the thing that's worth understanding about this is that in a world in which Trump's partisan politics may have evolved over the years, his admiration for tariffs seemed to be one of the most consistent, long -held beliefs that he has had.

2:20Well, I mean, I do know that he has a long-held interest in tariffs that goes back to the 80s, doesn't he? It feels like. I feel like he used to be very concerned specifically about Japanese imports of cars into the United States. But I don't know fully where he got this philosophy that tariffs were the answer from.

2:39Natalie Sherman:I mean, he was a New York City real estate man. This was the late 1980s. And to your point, Tristan, he was fascinated with tariffs. In fact, he did this interview with Oprah, legendary talk show host, and he specifically critiqued Japan. We're a debtor nation. Something's going to happen over the next number of years with this country because you can't keep going on losing 200 billion. And yet we let Japan come in and dump everything right into our markets. And he said that, you know, it wasn't fair that Americans can't sell stuff in Japan because Japanese companies, he says, they come here to the United States and they sell their cars, their VCRs.

3:13Natalie Sherman:And in his words, they knock the hell out of our companies. It's not free trade. If you ever go to Japan right now and try to sell something, forget about it. Just forget about it. It's almost impossible. In 1989, he gives this interview to ABC News here. And in it, he says, I believe very strongly in tariffs. We're a debtor nation and we have to tax. We have to tariff. We have to protect this country. That was more than 30 years ago. And when you read those words, when you hear what he was saying, it sounds so akin to Donald Trump's economic message today. I know that you covered the first Trump administration, so you must have spent quite a bit of time on the trade question.

3:53He had this great love of tariffs then, but he didn't bring them in in the same way. So what did he actually do on this front in the first time he was in the White House?

4:01Natalie Sherman:So when he first won, it seems like he was targeting specific industries that he feels are really critical to American national security, things like steel and aluminum. And he put tariffs on those specific sectors. He also went on to put widespread tariffs on a majority of goods coming in from China, some$300 billion worth of Chinese imports. But that was on just the country of China. What we are seeing now is on a totally, totally different scale. If like last time in the first term, let's say it was the size of a pebble, the tariffs, what you are looking at now is like Mount Everest. It is multiples and multiples of what we saw during his first administration.

4:45Okay, so explain to me then how we got Trump tariffs unleashed in the second term then, please. The moment I would say that tariffs really became central to his second term was April 2nd. Liberation Day, is that right?

4:59Natalie Sherman:That is what it was dubbed here by the Trump administration. Trump gave remarks in the Rose Garden of the White House, And he spoke for about 50 minutes as he announced widespread tariffs on nearly every country around the world. Thank you. Nice crowd. What a good looking group of people. Well, we have some very, very good news today and a lot of good things are happening for our country. Please sit down. His argument was that other countries had been taking advantage of the United States economy. They had been subsidizing their industries and that it was time for the United States to fight back.

5:38April 2nd, 2025 will forever be remembered as the day American industry was reborn, the day America's destiny was reclaimed, and the day that we began to make America wealthy again.

5:55Natalie Sherman:At one point, he singled out specific examples. He talked about motorcycles and the auto industry. That's why effective at midnight, we will impose a 25 percent tariff on all foreign made automobiles.

6:13Natalie Sherman:And he went on to call up this guy, Brian, to the stage. Brian, I'd like to have you come up here for a second, OK? I just see him sitting. He's been a fan of ours. And he understands this business a lot better than the economists. economist. Brian was wearing a Trump hat and a yellow construction vest. He was from Macomb County, just north of Detroit, known for its manufacturing auto industry. I have watched my entire life. I have watched plant after plant after plant in Detroit and in the metro Detroit area close. And he singled out the fact that Trump was going to revive, in his view, the automobile sector.

6:52And in six months or a year, we're going to begin to see the benefits. I can't wait to see what's happening three or four years down the road.

6:59Natalie Sherman:He calls on the Commerce Secretary, Howard Lutnick, to bring up a chart. I'd like to see the chart. If you have it, could you bring it up, Howard? And so you see the Commerce Secretary walk up on stage with this giant poster board that reads reciprocal tariffs. And interesting, it looks like this giant color-coded spreadsheet in one column. You see countries listed, China, Vietnam, etc. And in the other column, you saw the perceived tariff rate, right, which also included, in their view, some, say, non-tariff things that were hurting the U.S. economy. So if you look at that, China, first row, China, 67 percent, that's tariffs charged to the USA, including currency manipulation and trade barriers.

7:45So 67 percent, I think you can, for the most part, see it. Those with good eyes.

7:49Natalie Sherman:And in the final column, you saw a list of what they said they were going to charge these countries in retaliation. So it's 67 percent. So we're going to be charging a discounted reciprocal tariff of 34 percent. I think, in other words, they charge us, we charge them, we charge them less. So how can anybody be upset? The president gave a nod to American history and said that for decades and decades, the U.S. was a tariff-backed system and that it was so wealthy at some points that it didn't know what to do with all that money. Then in 1913, for reasons unknown to mankind, they established the income tax so that citizens rather than foreign countries would start paying the money necessary to run our government.

8:34Natalie Sherman:So he's very nostalgic for this era of widespread tariffs across the board. Okay, so there was a sort of economic orthodoxy that Trump was facing that suggested that tariffs would be a bad idea. Trump imposed his tariffs, what, like six months ago now, more than that. So we've had a bit of time to actually see how they've ended up working. What are you seeing there in the U.S.? Well, look, a lot of American consumers have been really anxious about what tariffs might mean in terms of the price of goods. But I would say the key groups that I really, really wanted to hear from were small businesses, because arguably they've had to change up their operations.

9:17Natalie Sherman:The BBC has spoken to a number of businesses who feel a lot of economic angst and have had real financial struggles navigating this new terrain. But to start with, I really wanted to hear from someone who I've known over the years who is a big fan of Trump's tariff policies. His name is Drew Greenblatt. His company makes wire baskets and other steel products at a couple of different facilities. So I went up to go visit him in Baltimore the other day.

9:53Let's take a walk through.

9:55Natalie Sherman:Okay. Did I bring the glasses? Yes, they're on my head. I was like, did I get the safety glasses? Welcome to Marlin. We're so glad you're here. It's a factory that makes everything, and it starts off with a coil of wire that weighs more than a car. We take this wire and we bend it, and then we make it into baskets or racks, and then we ship it to our clients in 45 countries. We use stainless steel and plain steel. Our biggest industries are medical devices, aerospace, food processing. When you eat a potato chip, the potato chips are made on this basket. And right now you could hear the 120-ton press brake coming down, bending the basket.

10:46We make the baskets for the biggest olive companies in the world, the biggest potato chip companies in the world.

10:53Natalie Sherman:So, Drew, we first met a couple years ago. I was working on this story about what it means to make things in America. And I wanted to come back to you because I know that you are very proud of making things here in the U.S. And I recall even at that time you were a fan, I believe, of the tariffs. So how are you feeling about tariffs? We are thrilled with the tariff policy. This tariff policy is going to grow American jobs. It's going to make our nation more resilient and thrive. In our company, we have been hiring people. Our sales have gone up. We've been buying robots and technology, and we've been hiring talent.

11:28And you attribute that to the tariffs. The tariff policy is very helpful because it enables our factory workers to have a shot, to be competitive against China, to be competitive against Mexico, to be competitive against Europe. Let me put it to you this way. The Baltimore Ravens is our football team. And when we go on the field, it's only fair that on the beginning of the game, it's zero to zero. For decades, whenever the equivalent of our American factory workers went on the field, it was 21 to zero at the kickoff because the tariff policy was so unfair in the past. Finally, we have a situation where we can go on the playing field where it's level.

12:06I live in a very challenged neighborhood here in Baltimore. We got to give these people a path to prosperity. We got to give these people a lane to get into the middle class, to get off food stamps, to buy a car. How do you do that? You got to have$80 ,000 a year jobs without a high school education. How do you do that? You got to make it so that it makes more sense to hire a person from Sandtown than hire a person from Shanghai. That's the key. Well, Drew seems like a big fan. But one of the criticisms of the tariffs has been that it's something of a one-size-fits-all policy and that what works for one industry might not work for another.

12:48So who else have you been speaking to who has a different view on this?

12:53Natalie Sherman:Yeah, I mean, to that point, Tristan, I also spoke to this guy, Dan D. Gray. I first met him also a couple of years ago. And he makes speakers here in the United States, in Minnesota. and he's had real frustrations with the tariff policy and the unpredictability of it all. I'm Dan Diggory, and I'm CEO of MISCO, Minneapolis Speaker Company. We make speakers for commercial aircraft, gaming devices in casinos. We make speakers for the military. And by the way, we recently helped the U.S. House of Representatives change the speakers that sit at each member's desk. So we hope that also improves overall communication.

13:36It's been challenging. You know, when the tariffs were put on during the first Trump administration, the message to all of us was, if you have your supply chain running through China, you should be diversifying it. So that's what we did. So we moved to Indonesia, we moved to Vietnam, We've set up some parts suppliers in Taiwan, things like that. So now with the broader tariffs, of course, now there's tariffs on all those countries, too.

14:06Natalie Sherman:And prior to this past spring, did you face tariffs at all on things you were importing from Vietnam and Indonesia? Or were they at a zero percent tariff rate? Yeah, we weren't paying any tariffs. And that, of course, was the incentive, right? high tariff rate on goods coming from China, no tariff rate from some of these other countries. So now we're paying tariff from almost everywhere. And so these are products made in the USA, but you say you need the parts from Asia, that you cannot buy these parts, you say, from the United States. They are not made here. That's correct. They were 20 years ago.

14:44But over time, as more companies relocated their manufacturing, then the supply chain goes with them. And so a lot of the supply chain either moved over to Asia or went out of business because there was no industry here to support them. Now, the challenge for us, of course, is our competitors in other countries don't have the same tariff situation.

15:08Natalie Sherman:Dan, how much more would you say you've paid since April in tariffs? Oh, I don't know. Hundreds of thousands of dollars. Does it feel punitive right now? Well, it is to the extent that you're paying a higher tax, right, than your global competitors are paying. And that results in American business being less competitive. So I think that's not a good situation for American businesses. That's not a good situation for American workers. I've had a factory in America for 75 years, right? You don't have to preach to me about the value of American manufacturing. I want to do it, but I'm going to need some different conditions for it to continue to be successful.

15:56Dan sounds a lot less happy about the whole thing than Drew, who we heard from earlier is. I mean, I guess if you have a complex supply chain like Dan does, maybe the one size fits all criticisms of tariffs apply more in his case. So, I mean, his frustration is maybe understandable.

16:18Natalie Sherman:And Tristan, a number of small businesses have been frustrated with the economic impacts of these tariffs. And in fact, some of them are so frustrated that they are at the center of the Supreme Court case here in Washington this week. They are challenging whether it's actually legal for Trump to impose these sweeping tariffs.

16:50150 years ago, they were hunting us down to kill us, and now they're hunting down immigrants to deport them. This is First America, the true story of how the United States came to be and how we got to this present moment. Listen to First America wherever you get your podcasts.

17:20Natalie Sherman:Our colleague, Natalie Sherman, she has been covering this case, and she is in fact going to be inside the Supreme Court for this major case on Wednesday. And so I called her up to understand this case. Hi, I'm Natalie Sherman. I am an online business writer for the BBC. I'm based in New York and have been covering tariffs since the president's first term. How much are Americans feeling the effects of these tariffs in their everyday lives when they go shopping? I mean, if you look at, as the government does every month, how prices are changing at the grocery store or in the toy store or on Amazon, you can see prices for some items go up.

18:01So we've seen coffee prices go up. We've seen banana prices go up. We've seen tomato prices go up. Toy prices go up. Electronics. So businesses have been raising prices a little bit so far and will raise prices moving forward. What we know from Trump's first term, when we saw a much more limited, smaller tariff go into place on goods from China, is that within a year, it had increased annual costs for the typical American household by about$400.

18:33Natalie Sherman:So you're saying that the average American household paid about$400 extra per year as a result of tariffs put in place on China during President Trump's first term. And to be really clear, those were a tiny, minuscule amount of tariffs compared to the huge enormity of tariffs we're looking at this time. That's right. This time, the estimates are much larger. The Budget Lab at Yale, which has looked at these tariffs extensively, thinks that you're essentially paying$1 ,800 more because of the tariffs than you would have otherwise. So, Natalie, we have spent a bulk of this episode talking about the economic impact of these tariffs.

19:11Natalie Sherman:But the big question in front of the Supreme Court this week is not one about economics. It's a legal question. It's about whether or not these tariffs are legal. What's at stake here? So this case does not challenge every single tariff that the Trump administration has announced. It's specifically aimed at tariffs that the president has imposed using a 1977 emergency law called AIIPA. He used it first with Canada, Mexico and China, and then again in April on Liberation Day. And what that law does is it authorizes the president to respond to an unusual and extraordinary threat by investigating, regulating imports.

19:54And AIP has been used by many presidents in the past for sanctions on countries like Iran, but it really hasn't been used for tariffs before.