Speaker 1: Welcome to the Votes and Verdicts podcasts hosted by Bloomberg Intelligence,
Speaker 1: the investment research arm of Bloomberg LP. In this podcast series,
Speaker 1: we talk about the intersection of business policy and law.
Speaker 1: My name is Holly from I'm an analyst with Bloomberg
Speaker 1: Intelligence covering consumer and industrials litigation. Today's podcast will focus
Speaker 1: on several key court rulings impacting tariffs and specifically a
Speaker 1: May twenty eighth decision by the US Court of International
Speaker 1: Trade and May twenty ninth decision by a Washington District
Speaker 1: court holding that President Trump's reciprocal tariffs and terriffs imposed
Speaker 1: on China, Canada, and Mexico were unlawful. I'm delighted to
Speaker 1: be joined today by Stanford Law School Professor Alan Sykes.
Speaker 1: Professor Sykes is the founder of Stanford Law School's LM
Speaker 1: program in International Economic Law, Business and Policy, as editor
Speaker 1: of various trade journals. He's a graduate of Yale Law
Speaker 1: School and received his PhD in economics from Meale University.
Speaker 1: Professor Sykes signed and amicus freef and support of the
Speaker 1: plaintiffs in both cases that the International Trade Court decided.
Speaker 1: One of those cases was filed by importers who say
Speaker 1: they would suffer irreparable harm if there reciprocal terariffs were
Speaker 1: allowed to continue, and the second was filed by twelve states.
Speaker 1: Thank you for joining us again, professor, and we'll dive
Speaker 1: right into the topic. So, the International Trade Court on
Speaker 1: May twenty eighth found executive orders imposing so called reciprocal
Speaker 1: tariffs or otherwise known as worldwide tariffs and tariffs on China, Canada,
Speaker 1: and Mexico related to fentanyl trafficking were unlawful. Can you
Speaker 1: explain the International Trade Course ruling?
Speaker 2: Sure? The Port of International Trade took the two sets
Speaker 2: of tariffs separately, the worldwide and retaliatory tariffs and the
Speaker 2: so called trafficking tariffs relating to fentanyl. With respect to
Speaker 2: the worldwide and retaliatory tariffs, which are the bulk of
Speaker 2: the tariff on the rest of the world other than
Speaker 2: Canada and Mexico, the court ruled that the International Emergency
Speaker 2: Economic Powers Act, known as AEPA does not give the
Speaker 2: President the authority to impose the sweeping tariffs that he
Speaker 2: proposed to impose on the world as a whole, the
Speaker 2: ten percent tariff on everyone and then the reciprocal tariffs
Speaker 2: that would range up to I believe it was something
Speaker 2: like eighty percent on certain countries. The reasoning on the
Speaker 2: worldwide retaliatory tariffs was interesting. The court did not accept
Speaker 2: the argument put forward by some plaintiffs that AEPA does
Speaker 2: not allow the use of tariffs at all, but rather
Speaker 2: the court said that even if AYEPA does allow tariffs
Speaker 2: under certain circumstances, it does not allow the kind of
Speaker 2: unbounded tariffs that the President has imposed, which are not
Speaker 2: limited in time, very much higher than US tariff commitments
Speaker 2: in US statutes, and goes without saying, much higher than
Speaker 2: the US commitments under international trade agreements, and chosen against
Speaker 2: any country the President wishes. That that sort of sweeping
Speaker 2: authority was beyond what IEPA conferred, and the thinking, in
Speaker 2: part was that if the authority, as the government put
Speaker 2: it forward, were to be accepted, then AEPA would be
Speaker 2: in effect of delegating to the President all authority over
Speaker 2: tariffs to do whatever he wants, any tariff he wants,
Speaker 2: in any country he wants, for any duration he wants,
Speaker 2: and that would be unacceptable under the Constitution, both in
Speaker 2: relation to what's known as the non delegation doctrine and
Speaker 2: what's known as the major questions doctrine. So the Court said,
Speaker 2: we're going to construe the statute to be consistent with
Speaker 2: the Constitution, and therefore the sweeping tariffs that the President
Speaker 2: composed under AEPA or simply not acceptable. Then with respect
Speaker 2: to the so called trafficking tariffs, the Court said that
Speaker 2: the tariffs imposed by the president. First of all, it
Speaker 2: concluded that this was not an unreviewable political question, that
Speaker 2: the Court did have authority to review the president's decision
Speaker 2: with regard to the trafficking tariffs. And then, having reached
Speaker 2: that conclusion, it went ahead to say that these trafficking
Speaker 2: tariffs do not, in the words of the statute, deal
Speaker 2: with the emergency, which is thought to be drug trafficking. Either,
Speaker 2: they simply impose punishment on Canada and Mexico for failing
Speaker 2: to have done more themselves to abate the problem of
Speaker 2: drug trafficking. And the Court ruled that that did not
Speaker 2: meet the statutory requirement that the measures taken by the
Speaker 2: President actually deal with the emergency in question.
Speaker 1: You said you agree with the results of the International
Speaker 1: Trade Court's ruling. Do you see any possible vulnerabilities on appeal.
Speaker 2: I do agree with the result. I hope that it
Speaker 2: holds up on appeal. If I were to take the
Speaker 2: other side of the argument for argument's sake, I think
Speaker 2: one possible criticism would be that the statute, even if
Speaker 2: it does not grout, does not grant unbounded statutory authority
Speaker 2: for tariffs. The President didn't literally claim unbounded authority. He
Speaker 2: declared a national emergency, said it was an unusual and
Speaker 2: extraordinary situation, So he went through all the statutory hoops
Speaker 2: and did not in a formal sense claim unbounded authority
Speaker 2: over tariffs, although as a practical matter, one could certainly
Speaker 2: argue that that's what he took on. Another aspect of
Speaker 2: the decision that might be open to argument would be
Speaker 2: the part of the decision that said that the Trade
Speaker 2: Act of nineteen seventy four, and I didn't mention this
Speaker 2: before the Court of International Trade said that the Trade
Speaker 2: Act of nineteen seventy four, essentially because it was responding
Speaker 2: to the President Nixon import surcharge at the end of
Speaker 2: the gold standard period in the early seventies, and it
Speaker 2: created a statute called the section of the statute called
Speaker 2: the Trade Act of nineteen seventy four. Section one twenty
Speaker 2: two of that statute gives the President very limited authority
Speaker 2: to impose time limited, modest tariffs in response to a
Speaker 2: balance of payments emergency, and the Court of International Trade
Speaker 2: said that by implication, the enactment of section one twenty
Speaker 2: two of the seventy four Act took away the president's
Speaker 2: authority under AEPA to impose tariffs for balance of payments purposes,
Speaker 2: and it interpreted the worldwide and retaliatory tariffs based on
Speaker 2: our trade deficits to be effect in effect, a balance
Speaker 2: of payments measure. So that the argument might be on
Speaker 2: the other side that even if section one twenty two
Speaker 2: does give the president limited authority to deal with balance
Speaker 2: of payments problems, it doesn't necessarily take away the emergency
Speaker 2: authority that might have been contained in IEPA. And then
Speaker 2: I think maybe the hardest issue that might come up
Speaker 2: on appeal for the plaintiffs relates to the trafficking tariffs,
Speaker 2: where the Court ruled that the tariffs on Canada and
Speaker 2: Mexico did not deal with drug trafficking. Rather, they simply
Speaker 2: punished and put pressure on Canada and Mexico to change
Speaker 2: their own behavior. The problem with that thinking, potentially, is
Speaker 2: that the United States for decades has used sanctions to
Speaker 2: try and persuade or coerce, whichever word you prefer our
Speaker 2: counterparties in the world in various situations to change their
Speaker 2: behavior to help the United States. And to say that
Speaker 2: the United States cannot do that under AEPA is perhaps
Speaker 2: at odds with what one might expect it to be
Speaker 2: the construction of So I think that'll be an argument
Speaker 2: that's raised off pel for sure.
Speaker 1: Yeah, I was reading that. You know, some station lawyers
Speaker 1: are concerned because they think that this would take away
Speaker 1: the president's power to use those kinds of pressures to
Speaker 1: get compliance with whatever policy or problem he's trying to address. So,
Speaker 1: in turning now to the other decision, I mentioned the
Speaker 1: District Court's decision of Washington d. C. That court also
Speaker 1: found the tariffs unlawful. Can you explain how that court's
Speaker 1: ruling differed from the International Trade Court's ruling.
Speaker 2: Yes, The key difference was that the DC District Court
Speaker 2: accepted the argument put forward by a number of plaintiffs
Speaker 2: that AIPA does not contain authority for tariffs at all,
Speaker 2: that it simply is a statute about using other kinds
Speaker 2: of measures in emergency situations rather than tariffs, and that
Speaker 2: meant that the case did not have to be transferred
Speaker 2: to the Court of International Trade, which has exclusive jurisdiction
Speaker 2: over disputes arising out of statutes that imposed tariffs and
Speaker 2: so forth. By ruling that AIPA does not allow tariffs
Speaker 2: at all, the Court was able to keep jurisdiction. And
Speaker 2: of course, once you say that AIPA does not those
Speaker 2: tariffs at all or allow the imposition of terifts at all,
Speaker 2: it immediately follows that all of the tariffs imposed by
Speaker 2: the Trump administration, both the worldwide and retaliatory tariffs and
Speaker 2: the trafficking tariffs, are unlawful. So this was a different
Speaker 2: type of decision. The Court emphasized its view that the
Speaker 2: power to regulate is not the power to tax. IIPA
Speaker 2: refers to the regulation or gives the power to regulate
Speaker 2: importation of property in which a foreign national has an interest.
Speaker 2: The court said regulating importation is not the same as
Speaker 2: taxing importation, and went through a lot of historical material
Speaker 2: to argue that the power to regulate is not the
Speaker 2: power to tax, and in the course of that analysis,
Speaker 2: The Court referred to a decision by the Court of
Speaker 2: Customs and Patent Appeals, which is the predecessor to the
Speaker 2: Federal Circuit, in a case called Yoshida, which ruled under
Speaker 2: the Trading with the Enemy Act, which has language more
Speaker 2: or less identical to the AIPA language in terms of
Speaker 2: what the president's authority is. The court said that it
Speaker 2: found the Yoshida decision, which said that the predecessor Act
Speaker 2: did allow tariffs to be unpersuasive, and that it was
Speaker 2: not binding on the District Court at DC in any event,
Speaker 2: because the District Court of DC does not sit underneath
Speaker 2: what is now the Federal Circuit. So that was the
Speaker 2: key difference in the District of DC decision.
Speaker 1: As you said, the District Court found APA doesn't authorized
Speaker 1: terras at all, whereas the International Trade Court said in
Speaker 1: a subsequent order that the word opining on whether AIPA
Speaker 1: categorically allows for terraffs. Do you have any thoughts as
Speaker 1: to why the International Trade Court didn't make a ruling
Speaker 1: on that issue.
Speaker 2: Yeah, I think there are several factors. I mentioned the
Speaker 2: Yoshida decision a moment ago, which was from the Appellate Court,
Speaker 2: to which appeals from what is now the Court of
Speaker 2: International Trade goes. So the Court of International Trade is
Speaker 2: bound by the Yoshida decision, which was not a decision
Speaker 2: under AEPA, as I said, it was a decision under
Speaker 2: the Trading with the Enemy Act. But the statutory language
Speaker 2: of that Act was essentially identical for present purposes to
Speaker 2: the language in AIPA. So the Court might have felt
Speaker 2: that it couldn't go against the prior ruling in Yoshida. Also,
Speaker 2: I mean, it's clear there is a textual argument for
Speaker 2: the government's position, which is that the statute authorizes regulation
Speaker 2: of importation, and certainly a traditional way of regulating imports,
Speaker 2: one might say, is to use tariffs. That's certainly, historically
Speaker 2: the principal way that the United States has controlled the
Speaker 2: flow of importation as practical matter, So the Court might
Speaker 2: have thought that it was a less shaky basis for
Speaker 2: the decision to say that we're not going to decide
Speaker 2: whether AI allows tariffs at all. But even if it does,
Speaker 2: it doesn't allow the broad tariffs that the President has
Speaker 2: imposed here, and indeed such a broad tariff power would
Speaker 2: be a constitutional issue.
Speaker 1: So I was going to ask you this question later,
Speaker 1: but because it's on the topic. You had mentioned that
Speaker 1: the Court was construing regulate the language naip A regulate importation.
Speaker 1: A lot of it has been said about the questions
Speaker 1: doctrine and how that might be used to strike down terrafs.
Speaker 1: Why isn't the regular imports language naive enough to encompass TIFFs?
Speaker 1: And how clear does Congress's statutory authority the authorization need
Speaker 1: to be. Does Congress need to specifically say tariffs in
Speaker 1: the statute?
Speaker 2: I don't know if it has to specifically say tariff's
Speaker 2: in the statute, certainly that would help with the clarity.
Speaker 2: There are a lot of issues beyond just whether or
Speaker 2: not tariffs are authorized. There is a question of how
Speaker 2: long they can remain in effect. If it's an Emergency
Speaker 2: Powers Act, one might have thought that there would be
Speaker 2: some limitation of the authority of the president to act
Speaker 2: to the period of emergency. The Congress didn't speak to that.
Speaker 2: The magnitude of the measures that are being taken, which
Speaker 2: are or far beyond any terifts that the United States
Speaker 2: is imposed in modern times. Congress didn't necessarily speak to
Speaker 2: the question of whether there's any constraint on the magnitude
Speaker 2: of the measures that the president can take. Congress hasn't
Speaker 2: spoken really to the concept of what exactly is a
Speaker 2: national emergency and could a pray deficit be construed as
Speaker 2: a national emergency that gives the president sort of unlimited, unbounded,
Speaker 2: no time limitation, authority to impose tariffs for as long
Speaker 2: as he wants against him ever he wants. So there
Speaker 2: are a lot of ways in which Congress could have
Speaker 2: spoken more clearly here. And I know that there are
Speaker 2: some commentators who think that when this issue finally reaches
Speaker 2: the Supreme Court, that there's a decent chance that the
Speaker 2: major questions doctrine will end up being the key issue.
Speaker 1: So yeah, So it reminds you sort of like my
Speaker 1: first year contract first, your law school contract class, where
Speaker 1: there's like no meeting of the minds that there's not
Speaker 1: enough details in the contract. It sounds like, you know,
Speaker 1: Congress may not have put enough details in the statute.
Speaker 1: So what that leads me to the next question, which is,
Speaker 1: you know, neither the District Court nor the International Trade
Speaker 1: Court addressed whether the trade deficit constituted an emergency or
Speaker 1: the fentanal trafficking for that matter, Do you have any
Speaker 1: thoughts as to why both of those courts declined to
Speaker 1: address that issue.
Speaker 2: Yeah, I mean, I don't know for sure what was
Speaker 2: in their head at the time, but I think it's
Speaker 2: awkward for any court to say we know better what
Speaker 2: constitutes a national emergency than the President of the United States.
Speaker 2: I think there's a very strong instinct to try and
Speaker 2: find another basis for ruling to get the same outcome
Speaker 2: without having to say that we the courts are going
Speaker 2: to second guest the president on the issue of national emergency.
Speaker 2: So the Court of International Trade sort of ducked that
Speaker 2: question in favor of saying that the unbounded delegation would
Speaker 2: run a foul of constitutional concerns and therefore will construe
Speaker 2: the statute not to do that, And the District Court
Speaker 2: duct the issue by finding that tariffs are not allowable
Speaker 2: at all, So it wasn't necessary to address the question
Speaker 2: of whether there's a bona fide emergency. When I said
Speaker 2: earlier that I agreed with the result in the case,
Speaker 2: I think the reason that I agree with it is
Speaker 2: precisely though, because I think that at least with respect
Speaker 2: to the worldwide and retaliatory tariffs, putting the fentanel issue
Speaker 2: to the side. It is almost absurd to call bilateral
Speaker 2: merchandise trade deficits a national emergency. We've had them since
Speaker 2: the beginning of trade. We've had aggregate trade deficits for
Speaker 2: the last half century. We will probably continue to have
Speaker 2: them for the next half century, as long as the
Speaker 2: United States has a greater need for capital than the
Speaker 2: national savings provides. It is a mathematical necessity that we
Speaker 2: run a trade deficit to finance the importation of capital.
Speaker 2: So to call something that's on the scale of a
Speaker 2: century and an emergency is almost absurd to any economically
Speaker 2: literate person, I think, but it's hard for a court
Speaker 2: to say that the courts are not economists. The legal
Speaker 2: authority to review the presidential decisions is not an authority
Speaker 2: to judge them for sound economic policy. And so both courts,
Speaker 2: I think we're looking for other grounds to reach what
Speaker 2: is clearly the right outcome here, which is to say,
Speaker 2: this is not an emergency situation, and the Congress needs
Speaker 2: to weigh in if we're going to impose this kind
Speaker 2: of change in American trade policy.
Speaker 1: So do you think that the Supreme Court would try
Speaker 1: to avoid that issue as well.
Speaker 2: I don't know. I mean, I think there's sort of,
Speaker 2: you know, the kind of four ways to decide this
Speaker 2: case against the administration. One is to say AIPA doesn't
Speaker 2: allow tariffs. One is to say that it if it
Speaker 2: or to allow the extent of tariffs that the administration
Speaker 2: claims that it's somehow unconstitutional, either under the old non
Speaker 2: delegation doctrine, which has been moribund since the New Deal,
Speaker 2: or under the newer major Questions doctrine. And the final
Speaker 2: thing would be to say that there's not really an
Speaker 2: emergency here, which I think is really the correct thing
Speaker 2: to say. That's the real reason why this is why
Speaker 2: this action by President Trump is unacceptable. But the Supreme Court, well,
Speaker 2: I wouldn't be at all surprised if it finds an
Speaker 2: alternative way to rule, assuming the rules against the president.
Speaker 2: I wouldn't be surprised if it was not on the
Speaker 2: basis of whether there's a genuine national emergency, but rather
Speaker 2: on one of these other bases. And I'll just add,
Speaker 2: by the way that I think it would be very
Speaker 2: difficult to rule against the government on the ground that
Speaker 2: a fentanyl issue is not a national emergency. We've had
Speaker 2: thousands of people die from fentanyl poisoning, and that I
Speaker 2: think it is very difficult to say could not be
Speaker 2: reasonably viewed as a national emergency. So the court, if
Speaker 2: it wants to knock out the fentanyl related tariffs, probably
Speaker 2: has to find some other legal grounds.
Speaker 1: Right, And so the courts, the lower courts, finding that
Speaker 1: the terroiffs didn't deal with that emergency sort of avoided
Speaker 1: them having to say that that was not an emergency,
Speaker 1: because I think most commentators agree that it is. So.
Speaker 1: Just yesterday, which was June tenth, the Federal Circuit Court
Speaker 1: of Appeals made an important ruling. So, just as you
Speaker 1: know background, the Federal Circuit Court of Appeals is the
Speaker 1: appellate court that hears appeals from the international Trade courts ruling.
Speaker 1: It had entered an administrative stay of the International Trade
Speaker 1: Court's ruling on May twenty nine, and that resulted in
Speaker 1: the terraffs being reinstated, And just yesterday, on June tenth,
Speaker 1: that court entered a longer stay, saying the ruling the
Speaker 1: lower court ruling will be on hold until the appeal
Speaker 1: has decided on the merits, so the terrorists will be
Speaker 1: in e fact at least until the appeal has decided.
Speaker 1: Do you think that the Federal Circuit Court's June tenth
Speaker 1: continuation of the stay of the lower court's ruling Penny
Speaker 1: appeal is any indication of how it will rule on
Speaker 1: the merits.
Speaker 2: I don't think it's any definitive indication at all. I
Speaker 2: think what it means, if anything, is that the court
Speaker 2: sees that there are serious arguments on both sides, and
Speaker 2: it's not certain yet how it's going to rule perhaps,
Speaker 2: and therefore it makes sense to stay the lower court
Speaker 2: decision so as not to temporarily distrut disrupt the president's
Speaker 2: trade policy agenda. If indeed, in the end, the conclusion
Speaker 2: is that the president has the power to do what
Speaker 2: he's doing. So I wouldn't infer from the extension of
Speaker 2: the stay that the Federal Circuit has more made up
Speaker 2: its mind in favor of the administration. I think that's
Speaker 2: probably an unwarranted speculation, right.
Speaker 1: So the other question that I forgot to ask you,
Speaker 1: was they the full circuit the full panels, So it's
Speaker 1: going to hear this appeal. So it's called an on
Speaker 1: bank hearing, and that's you know, usually not done. Usually
Speaker 1: there's a three judge panel. Was that surprising to you
Speaker 1: at all that they decided to have an on bank hearing?
Speaker 2: No, I mean on bank decisions are You're quite correct
Speaker 2: to say that they're not common, but they do happen,
Speaker 2: and they they are put together usually in matters of
Speaker 2: particular importance, and this is this is a matter of
Speaker 2: quite extraordinary importance. It's a it's a kind of remaking
Speaker 2: of US trade policy, Uh, without congressional oversight by a president.
Speaker 2: He's you know, decided to go against the statutes that
Speaker 2: set tariffs, passed by Congress and signed by prior presidencies,
Speaker 2: abrogated essentially every international trade agreement that we have, both
Speaker 2: on a multilateral scale with the WTO and all of
Speaker 2: our bilateral free trade agreements. And it's hard to think
Speaker 2: of a case in the Federal Circuit in recent years
Speaker 2: that's been more consequential than this. So it doesn't surprise
Speaker 2: me at all that they decided to hear the case
Speaker 2: on bok okay.
Speaker 1: And then the District court decision is also being appealed
Speaker 1: to the d C Circuit Court of Appeals. I wonder
Speaker 1: if that will be on bank also, I don't know.
Speaker 2: It's a narrower decision. As you know, the District Court
Speaker 2: in Washington, d C. Simply and joined the application of
Speaker 2: tariffs to the plainness in that case. So it's not
Speaker 2: nearly as sweeping a decision. And I would imagine the
Speaker 2: d C Circuit might think to itself that this on
Speaker 2: bank decision of the Federals is probably going to be
Speaker 2: the way that the case gets to the Supreme Court,
Speaker 2: if it's going to get there at all. So maybe
Speaker 2: it's not necessary to have an on bank proceeding in
Speaker 2: the DC Circuit.
Speaker 1: Who knows, Yeah, that makes sense. So there's a divergence
Speaker 1: in court opinions about whether the International Trade Court has
Speaker 1: exclusive jurisdiction to hear these cases. The International Trade Court
Speaker 1: said yes, The California Federal Court recently said yes and
Speaker 1: dismissed a case that was brought there that's currently on appeal.
Speaker 1: And then the District Court said no, said IPA doesn't
Speaker 1: authorize terrorists at all. So the Court of International Trade
Speaker 1: is not an exclusive jurisdiction. Which court do you think
Speaker 1: got it right?
Speaker 2: You know, it really turns on it turns on the
Speaker 2: decision on the merits. As the District Court pointed out
Speaker 2: as to whether or not APUA allows for terrorists at all.
Speaker 2: It's pretty clear in the jurisdictional statute for the Court
Speaker 2: of International Trade that if we have a dispute rising
Speaker 2: out of a statute that allows for the imposition of tariffs,
Speaker 2: then the Court of International Trade does have exclusive jurisdiction.
Speaker 2: So it really is a question of whether AIPA allows
Speaker 2: tariffs at all. The District Court said no and therefore
Speaker 2: kept jurisdiction. Other courts have read aip but to authorize tariffs,
Speaker 2: or at least arguably to authorize tariffs, and thought then
Speaker 2: that the Court of International Trade should resolve the issue. Ameke,
Speaker 2: This brief I signed includes a section arguing that AIPA
Speaker 2: does not authorize tariffs, and so I'm not going to
Speaker 2: say anything that would conflict with that, but I think
Speaker 2: that's where the battle is joined on who has jurisdiction right.
Speaker 1: So inevitably these cases are likely destined for the Supreme Court.
Speaker 1: How do you think the Supreme Court justices will rule
Speaker 1: on these cases, both on a potential appeal of the
Speaker 1: lower court decision to continue to stay and on the merits.
Speaker 2: Well, my guess is that Supreme Court would not interfere
Speaker 2: with the stay pending the expedited on bank appeal at
Speaker 2: the Federal Circuit. As far as the ultimate ruling on
Speaker 2: the merits is concerned, you know, it's always difficult to
Speaker 2: rule against the president in the exercise of emergency powers.
Speaker 2: On the other hand, I think the President has essentially
Speaker 2: co opted an emergency power statute to take over American
Speaker 2: trade policy in a situation that does not constitute an
Speaker 2: emergency at all, again putting the fentanyl issue to the side,
Speaker 2: And I suspect that many of the Supreme Court justices
Speaker 2: would have sympathy with that view, whether they are prepared
Speaker 2: to go against the president here, whether they have to
Speaker 2: think through all of the unintended consequences that might have
Speaker 2: company a ruling against the president on whatever grounds they
Speaker 2: might choose. So I don't think I can predict the
Speaker 2: outcome of merits at the Supreme Court, but I do
Speaker 2: hope that they will find a way to return trade
Speaker 2: policy to the Congress, which is where the Constitution puts it.
Speaker 2: And with a conservative majority court, I think the you know,
Speaker 2: fidelity to the Constitution and the original separation of powers
Speaker 2: is something that a lot of the justices care about.
Speaker 2: So you know that that kind of bodes somewhat well
Speaker 2: in terms of the plain is hope that the Supreme
Speaker 2: Court will ultimately rule against the administration.
Speaker 1: So if the Supreme Court does it, for a meaning,
Speaker 1: it holds both reciprocal tariffs and trafficking tariffs and lawful
Speaker 1: are there or or you know, one or the other.
Speaker 1: It holds reciprocal tarifts on lawful but allows the trafficking terrorists.
Speaker 1: Are there other statutes the president could use to implement
Speaker 1: either of these terroriffs?
Speaker 2: Yeah, this is uh, this is something that obviously is
Speaker 2: very important in terms of the practical impact of all
Speaker 2: this litigation. The steel and aluminum tariffs that the president
Speaker 2: imposed in his first administration and that he's now recently
Speaker 2: doubled are predicated in part on a statute from nineteen
Speaker 2: sixty two allowing presidential use of tariffs or other measures
Speaker 2: to address national security problems, and that requires a finding
Speaker 2: by the Commerce Department that imports or a threat to
Speaker 2: national security. The Commerce Department under the first Trump administration
Speaker 2: and Secretary Wilbur Ross made that finding, and that was
Speaker 2: a basis for the president's first round of steel and
Speaker 2: aluminum tariffs, and one suspects that the Commerce Department under
Speaker 2: Secretary Lutnik would renew that kind of finding with respect
Speaker 2: to a number of different industries, where the claim might
Speaker 2: be made, perhaps with a straight face, perhaps not that
Speaker 2: the imports are a threat to national security, so that
Speaker 2: could be used on a sectoral basis after findings by
Speaker 2: the Commerce Department that there was a threat to national
Speaker 2: security from imports of particular items. The broadest statute beyond
Speaker 2: the President's interpretation of i EPA giving tariff emphysician authority
Speaker 2: is Section three oh one of the nineteen seventy four
Speaker 2: Trade Act, which allows It was primarily enacted to allow
Speaker 2: the President to respond to other countries that violate their
Speaker 2: commitments under trade agreements with the United States, but it
Speaker 2: also contains the section that says the President can respond
Speaker 2: to unreasonable practices by foreign governments that burden US commerce.
Speaker 2: And of course, you may recall that the so called
Speaker 2: reciprocal tariffs were alleged by the President to be the
Speaker 2: product of unfair treatment of American exporters in foreign markets,
Speaker 2: and so this provision of the section three oh one Act,
Speaker 2: Second three oh one of the seventy four Act rather
Speaker 2: could be invoked to say that all of these bilateral
Speaker 2: trade deficits are a product of unreasonable behavior by foreign governments,
Speaker 2: and that's how we can justify these whopping reciprocal tariffs
Speaker 2: that were proposed back on so called Liberation Day. So
Speaker 2: that's a statute that might very well come into play
Speaker 2: as well. It was used already to impose very high
Speaker 2: tariffs on China during the first Trump administration, and so
Speaker 2: one can imagine that by shifting to the National Security
Speaker 2: Statute and the Unfair Trade Statute, the President, even if
Speaker 2: he lost on AEPA, could reconstruct a lot of the
Speaker 2: tariffs that he is now imposing under AEPA. It would
Speaker 2: require some time. It requires some preliminary investigations and findings
Speaker 2: by the agency. Commerce has to deal with the national
Speaker 2: security issue. The US Trade Representative has to make findings
Speaker 2: on the unreasonableness of foreign trade practices. But they've already
Speaker 2: done a lot of that legwork. Every every year or so,
Speaker 2: the USTR issues what's called the National Trade Estimates Report,
Speaker 2: which lists all of our major trading partners and all
Speaker 2: of the practices by those trading practors partners that we
Speaker 2: view as burdensome and unfair to the United States, and
Speaker 2: that could be the basis for findings of unreasonableness against
Speaker 2: all sorts of countries, and then retaliatory tariffs to punish
Speaker 2: them for their unreasonableness could be forthcoming under Section three
Speaker 2: oh one. So even if the President loses under i EKO,
Speaker 2: that's the battle might be one, but the war would
Speaker 2: not be over against the use of these large tariffs
Speaker 2: without congressional authorization.
Speaker 1: Interesting. Well, thank you so much for joining us, Professor Sykes,
Speaker 1: and it would be interesting to see what happens for sure,
Speaker 1: taken