What the actual tariff?
The Supreme Court struck down Trump's emergency trade tariffs, ruling he cannot use the International Emergency Economic Powers Act for tariffs since it's not a genuine emergency. Trump immediately announced new 10-15% global tariffs using different legal authorities, setting up ongoing legal and economic challenges.
Summary
The Supreme Court ruled 6-3 against Trump's emergency trade tariffs that were announced last April, determining that the International Emergency Economic Powers Act cannot be used for tariffs since it's designed for actual emergencies, not general trade policy. The Court found Trump was unconstitutionally expanding executive powers beyond what Congress authorized. In response, Trump immediately announced new 10-15% global tariffs using Section 122, a balance-of-payments crisis authority from the Bretton Woods era that arguably doesn't apply to current US economic conditions. This new authority only lasts 150 days, creating a temporary solution while Trump's team works to implement more permanent tariffs using other legal tools like Section 232 and Section 301. The situation has created massive complications for refunds, with approximately 1,800 companies suing to recover tariff payments they made under the now-illegal emergency tariffs. The refund process is expected to take years and ironically may result in Chinese companies receiving refunds while American consumers who bore the costs get nothing. The hosts note that tariffs remain unpopular with voters, and the ongoing legal chaos may politically damage Trump while he tries to reconstruct his tariff regime through slower legislative processes.
About this episode
<p>The Supreme Court just overturned President Donald Trump’s use of the emergency powers provision to impose tariffs. Now importers are suing for refunds, and the president has scrambled to leverage another old law to find a legal way to slow imports. Today on the show, Katie Martin and Rob Armstrong are joined by Alan Beattie, of the FT’s Trade Secrets newsletter, to sort the mess out. Also, they go short the “Halo” trade and long irony. </p><br /><p>For a free 30-day trial to the Unhedged newsletter go to: <a href="https://www.ft.com/unhedgedoffer" rel="noopener noreferrer" target="_blank">https://www.ft.com/unhedgedoffer</a>.</p><br /><p>You can email Robert Armstrong and Katie Martin at <a href="mailto:[email protected]" rel="noopener noreferrer" target="_blank">[email protected]</a>.</p><br /><p><a href="https://www.ft.com/content/6cfb9be9-3c5a-44fc-97da-77b4f6fc343e" rel="noopener noreferrer" target="_blank"><strong>Read a transcript of this episode on FT.com</strong></a></p><hr /><p style="color: grey; font-size: 0.75em;"> Hosted on Acast. See <a href="https://acast.com/privacy" rel="noopener noreferrer" style="color: grey;" target="_blank">acast.com/privacy</a> for more information.</p>
Key Insights
- The Supreme Court ruled that Trump unconstitutionally expanded executive power by using emergency legislation for non-emergency tariffs
- Trump's new Section 122 tariffs rely on outdated balance-of-payments crisis authority from the Bretton Woods era that doesn't apply to current US economic conditions
- The tariff refund process will ironically compensate Chinese companies who paid the tariffs while American consumers who bore the costs receive nothing
- The economic damage from Trump's tariffs primarily hurt the US rather than other countries, as tariffs mainly harm the importing nation
- Trump's tariff policies are unpopular with voters and the ongoing legal chaos may create political vulnerability while he reconstructs his trade regime
Topics
Transcript
Markets move fast. Get the insights you need in 10 minutes with Barclays Brief, a podcast from Barclays Investment Bank. Each week, our experts analyse market themes, helping you anticipate what's next. Listen to Barclays Brief wherever you get your podcasts. Donald Trump is learning the hard way that you can't always get what you want. Last week, the Supreme Court said that actually, Mr President, no, you cannot have your beloved emergency trade tariffs that you announced last April because you're not using them for an emergency. And anyway, you can't just do that because you feel like it. I'm paraphrasing the legal wording here, but the point is no tariffs. Trump reacted in his usual even-handed, thoughtful manner…
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