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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: How would you describe this moment in the trade war.

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Speaker 3: I think we're at a big turning point.

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Speaker 2: Brendan Murray leads Bloomberg's trade coverage.

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Speaker 3: We're really at an important juncture at the moment where

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Speaker 3: the question of Trump's strategy, this aggressive, I'm going to

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Speaker 3: put leverage on you strategy could be called into question.

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Speaker 2: It's a strategy that's become all too predictable. Trump comes

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Speaker 2: out swinging with big threats and then pulls back when

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Speaker 2: markets react.

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Speaker 3: And so the question now is can he keep in

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Speaker 3: a sense crying wolf like that, can he keep credibility

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Speaker 3: or will countries on the other side say, you know,

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Speaker 3: he's just bluffing. If we just ate this out, he

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Speaker 3: will rain this back because market pressure will be too great.

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Speaker 2: We're more than halfway through the ninety day pause on

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Speaker 2: Trump's sweeping reciprocal tariffs. That three month delay was supposed

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Speaker 2: to the US time to negotiate trade deals with countries

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Speaker 2: around the world. But besides a limited deal with the

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Speaker 2: UK and a tariff truce with China that's looking increasingly shaky,

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Speaker 2: there hasn't been much in the way of progress.

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Speaker 3: Now, the administration would say talks are advancing with various

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Speaker 3: countries Japan, South Korea, India, Switzerland, but otherwise they keep

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Speaker 3: saying this every week, that these deals are imminent and

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Speaker 3: they're not here yet.

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Speaker 2: And now there's pressure coming from a different direction the courts.

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Speaker 2: Last week, judges for the US International Trade Court ruled

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Speaker 2: that Trump's fentanyl related tariffs on China, Mexico, and Canada,

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Speaker 2: and his Liberation Day reciprocal tariffs the marquee policies of

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Speaker 2: his trade war are illegal. The Trump administration is appealing

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Speaker 2: and exploring other strategies to advance its agenda, but Brendan

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Speaker 2: says the legal setback is just the latest sign that

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Speaker 2: the US trade war isn't going according to plan.

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Speaker 3: We're at the point where the tables are sort of

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Speaker 3: turning to where Trump is either going to maintain this

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Speaker 3: leverage or it's going to slowly slip into the hands

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Speaker 3: of his negotiating counterparties.

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Speaker 2: I'm Sarah Holder, and this is the big take from

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Speaker 2: Bloomberg News Today. On the show, Trump's trade war and

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Speaker 2: his credibility face their biggest challenges yet. I speak with

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Speaker 2: Brendan Murray to get the latest on tariff negotiations, and

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Speaker 2: with Bloomberg's Eric Larsen to dive deeper into the Trade

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Speaker 2: Court's ruling and what comes next. The Trump administration may

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Speaker 2: have suffered a setback when its reciprocal tariffs were deemed

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Speaker 2: illegal last week, but that didn't stop the president from

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Speaker 2: announcing a new tariff hike days later. Standing before a

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Speaker 2: crowd of US steel workers near Pittsburgh on Friday, he

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Speaker 2: said he'd double existing tariffs on steel and aluminum from

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Speaker 2: twenty five percent to fifty percent. I asked Bloomberg's Brendan

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Speaker 2: Murray about the motivations behind the move.

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Speaker 3: Trump said that he hiked these steel and aluminum tariffs

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Speaker 3: because he wants to protect this industry as important for

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Speaker 3: national security. If America doesn't have its own steel makers,

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Speaker 3: its own aluminum smelters, then we're reliant on a lot

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Speaker 3: of other producers, including China. There's a distinction to be

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Speaker 3: made in the authorities that he used for both the

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Speaker 3: reciprocal tariffs that's the universal ten percent tariff on most

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Speaker 3: trading partners and the twenty five and now fifty percent

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Speaker 3: tariff on steel and aluminum. One is he used an

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Speaker 3: authority that's rarely been used. This is the authority that

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Speaker 3: the court struck down the other law. The authority that

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Speaker 3: he used was called Section two thirty two. It's been

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Speaker 3: done before, it's kind of legally established. It's a pretty

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Speaker 3: ironclad tariff that you can put on steel and aluminum

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Speaker 3: because of national security reasons. So the president suffered this

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Speaker 3: setback in court. A couple days later, he'd reminded the

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Speaker 3: world that these two thirty two tariffs on steel and

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Speaker 3: aluminum that he still has a lot of power over

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Speaker 3: setting tariff levels, and we saw him double those to

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Speaker 3: fifty percent.

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Speaker 2: Well, Trump made the announcement about the steel and aluminum

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Speaker 2: tariff hikes at the US Steel plant. What kind of

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Speaker 2: reaction did Trump get from the crowd, wells, it.

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Speaker 3: Was like a campaign event. The banner behind the stage

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Speaker 3: was the Golden Age, referring to sort of the golden

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Speaker 3: age of America that he wants to restore. So it

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Speaker 3: was a pretty receptive crowd. And of course, you know,

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Speaker 3: the steel industry lobby couldn't be happier about the result.

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Speaker 3: It may help the profits of steel companies. It may

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Speaker 3: protect production lines in states like Pennsylvania and Ohio where

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Speaker 3: steel is produced but it's also going to hurt a

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Speaker 3: lot of users of steel, the buyers of steel. These

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Speaker 3: are the companies that make washing machines and cars and

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Speaker 3: construct homes exactly. Construction companies are, you know, among the

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Speaker 3: biggest complainers of this that is only going to anger

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Speaker 3: countries at exports steel, Korea, Japan, the European Union, the UK.

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Speaker 3: The UK did this supposed deal with the administration. What

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Speaker 3: happens to their steel exports. So there's a lot of

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Speaker 3: questions and it just keeps getting the web keeps getting

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Speaker 3: more tangled every single day.

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Speaker 2: What other major trade negotiations were playing out in the

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Speaker 2: background this weekend? Were there any other major updates on

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Speaker 2: the tariffront.

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Speaker 3: Well, there's a number of countries that have these ongoing talks,

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Speaker 3: and it's sort of shuttle diplomacy, flying into Washington for

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Speaker 3: a couple of days, flying back to their capitals. The

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Speaker 3: Japanese are in at least round number four of talks.

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Speaker 3: The South Koreans are also pretty well advanced into their discussions.

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Speaker 3: Switzerland not an EU country, so it's got to negotiate

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Speaker 3: its own deal with the US is apparently getting pretty

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Speaker 3: close to a deal as well. India has long been

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Speaker 3: said to be among the front runners to get a

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Speaker 3: deal before the July ninth deadline. But interestingly, we saw

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Speaker 3: right after that court ruling, India sort of step back

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Speaker 3: and go, well, wait a second, now, maybe maybe the

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Speaker 3: president doesn't have as much leverage over US as he

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Speaker 3: used to. If this reciprocal tariff is going to be

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Speaker 3: proven illegal. They drew another line in the sand that

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Speaker 3: said we we no longer think that the ten percent

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Speaker 3: reciprocal tariff on US is acceptable and that has to

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Speaker 3: come off if we're going to keep talking. So what

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Speaker 3: we've seen is, you know, a lead up to about

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Speaker 3: now when the president feels like he's got a lot

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Speaker 3: of leverage, but it looks and the experts that we

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Speaker 3: talk to say that leverage is slowly slipping away. Time

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Speaker 3: is really ticking against the president. You know, he came

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Speaker 3: to office as the you know, the deal making president,

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Speaker 3: and if he can't deliver on those or he has

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Speaker 3: to issue another ninety day delay, you know that credibility

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Speaker 3: will be eroded.

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Speaker 2: And what about China. China accuse the US of violating

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Speaker 2: it's trade truce just today. Can you say more about

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Speaker 2: how China US relationship are being strained right now.

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Speaker 3: On Friday, when Trump said that China wasn't living up

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Speaker 3: to ince end to the bargain, he said something to

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Speaker 3: the effect of no more mister nice guy the end

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Speaker 3: of his social media post. China has a fairly long

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Speaker 3: standing policy of not responding to threats, intimidation, bullying, and

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Speaker 3: they're not driven to the negotiating table out of fear,

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Speaker 3: or at least that's the perception that the Chinese government

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Speaker 3: wants to portray. So what we saw was the Chinese

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Speaker 3: Commerce Ministry today saying this is not the kind of

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Speaker 3: environment that's helpful for talks to progress. President Trump really

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Speaker 3: wants to have a phone call with President she and

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Speaker 3: that will help spark negotiations and get things back on track.

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Speaker 3: And the Chinese officials who we report on say, we're

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Speaker 3: not going to sit down at the negotiating table if

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Speaker 3: you're telling us no more mister nice guy. That's essentially

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Speaker 3: the message that we heard out of Beijing.

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Speaker 2: Coming up, I sit down with US legal reporter Eric

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Speaker 2: Larson to ask how significant was the Trade Court's ruling

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Speaker 2: that deemed many of Trump's tariffs illegal and how will

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Speaker 2: that ruling impact the flu of trade negotiations the administration

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Speaker 2: is trying to rush through. Eric Larson, legal reporter for Bloomberg,

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Speaker 2: thank you so much for being here.

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Speaker 1: Yeah, thanks for having me.

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Speaker 2: Eric. We saw the biggest challenge yet to Trump's trade

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Speaker 2: policies come last week from the courts. Walk us through

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Speaker 2: the lawsuits that led us to this consequential ruling in

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Speaker 2: the US Court of International Trade. When they were mounted

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Speaker 2: and who was behind them? Sure?

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Speaker 1: So the tariffs were issued starting in February, and then

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Speaker 1: of course the big Liberation Day tariffs Global tariffs in

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Speaker 1: early April. And so around April twenty third, a group

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Speaker 1: of a dozen Democratic led states filed one of the

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Speaker 1: biggest lawsuits challenging them, filing in the Court of Internet

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Speaker 1: National Trade, and another group another lawsuit filed by a

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Speaker 1: group of small businesses, filed a very similar lawsuit. Those

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Speaker 1: cases ended up being consolidated, and the Court of International

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Speaker 1: Trade issued this ruling on May twenty eighth, finding that

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Speaker 1: the tariffs were in fact illegal and granting what's known

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Speaker 1: as a summary judgment against the tariffs without even holding

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Speaker 1: a trial. Determined that the facts were very straightforward and

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Speaker 1: no trial was necessary.

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Speaker 2: What were the central arguments the plaintiffs were making these

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Speaker 2: states and these small businesses, why did they think these

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Speaker 2: tariffs were illegal?

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Speaker 1: Sure, so the way that Trump rolled out these tariffs

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Speaker 1: was pretty unprecedented. He used an emergency law passed in

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Speaker 1: nineteen seventy seven that grants a president authority over different

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Speaker 1: kinds of financial transactions if a national emergency has been declared.

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Speaker 1: So what Trump did was declare a series of national

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Speaker 1: emergencies and then used this law to issue sweeping tariffs

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Speaker 1: against most countries in the world that we do business with.

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Speaker 1: Trump decided that the trade imbalance that we have with

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Speaker 1: a lot of countries are trade deficits, constituted a national emergency.

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Speaker 1: And the States and the groups that sued said, that's

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Speaker 1: not what the law is used for. Only Congress has

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Speaker 1: control over this level of tariffs and taxes. That's in

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Speaker 1: the constitution, and so they said it was illegal.

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Speaker 2: So that law that Trump used, the International Emergency Economic

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Speaker 2: Powers Act called AIPA of a trade experts, what was

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Speaker 2: it created for and what has it been used for

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Speaker 2: in the past.

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Speaker 1: Well, it's typically been used for sanctions if there were

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Speaker 1: a national emergencies, say with a specific country like Iran,

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Speaker 1: or a shortage of some sort of products that the

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Speaker 1: government decided constituted an emergency. And you know, I looked

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Speaker 1: into when it had been used before, and they were

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Speaker 1: incidents I never heard of. It's very under the radar.

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Speaker 2: So the judges sided with the plaintiffs said that using

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Speaker 2: AYEPA in this way was not legal. But the administration

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Speaker 2: quickly appealed and a federal appeals court temporarily reinstated the tariffs.

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Speaker 2: For now, where do we stand with tariffs while this

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Speaker 2: case is working its way through the appeals process and

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Speaker 2: what's next?

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Speaker 1: Sure, so the tariffs are currently in effect because of

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Speaker 1: that stay that was issued by the Court of Appeals

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Speaker 1: for the Federal Circuit in Washington, and it was a

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Speaker 1: very brief pause. It's an administrative stay. It's called while

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Speaker 1: the appeals court considers a longer lasting stay pending appeal,

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Speaker 1: which would essentially block the Trade Court's ruling until the

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Speaker 1: litigation is resolved. So a pretty long lasting ruling. We

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Speaker 1: don't have that yet. So what we're waiting for is

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Speaker 1: for the appeals court to rule on that motion for

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Speaker 1: a stay pending appeal. And it's pretty consequential because the

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Speaker 1: fact that the court granted this administrative stay just to

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Speaker 1: keep the status quo in place. While it considers this

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Speaker 1: longer lasting stay, you can't read too much into it.

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Speaker 1: So there is the possibility that this appeals court could

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Speaker 1: deny the stay pending appeal, in which case the tariffs

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Speaker 1: would go back into effect.

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Speaker 2: It's interesting because we've seen Trump and Trump administration officials

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Speaker 2: like Peter Navarro kind of played down the importance of

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Speaker 2: this case and this ruling publicly, while also trying very

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Speaker 2: hard to get an appeal and saying we needed to

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Speaker 2: use these powers to enforce our trade policies. What struck

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Speaker 2: you about the response so far?

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Speaker 1: It showed a little bit of there were two sides

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Speaker 1: of things. That there was what they were saying in

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Speaker 1: the court filings and then what they were saying in

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Speaker 1: public the court filings, they couldn't have been more clear

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Speaker 1: that they considered this ruling by the Trade Court to

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Speaker 1: be a massive threat to national security, a threat to

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Speaker 1: the president's authority to carry out negotiations with foreign countries,

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Speaker 1: saying that undermined President Trump's ability to negotiate all these

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Speaker 1: tariff deals and trade deals that of course we've been

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Speaker 1: watching the government conduct. That's why they were arguing for

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Speaker 1: this stay pending appeal that I mentioned earlier that we

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Speaker 1: still are waiting for. They're saying that they need it

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Speaker 1: because of how urgent it is, and then of course

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Speaker 1: in public they're talking about all the other ways they

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Speaker 1: can issue tariffs, and so maybe it's not that big

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Speaker 1: of a deal and they're moving forward with the tariffs.

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Speaker 2: Well, So, in your assessment, the assessment of your legal

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Speaker 2: sources trade experts, how big of a blow would a

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Speaker 2: loss on this this court case be for the Trump

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Speaker 2: administration and for its tariff policies.

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Speaker 1: I think it would be a historic loss for the

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Speaker 1: Trump administration if ultimately the Supreme Court upholds the Trade

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Speaker 1: Court's decision, because it would represent a big swing by

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Speaker 1: Trump's administration being shot down by the highest court in

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Speaker 1: the land, which he has a six' three conservative, Majority

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Speaker 1: and if they ultimately came down and, said, yes you

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Speaker 1: exceeded your, AUTHORITY i think it would probably be seen

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Speaker 1: as one of the biggest setbacks of his. Administration And

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Speaker 1: i've also spoken with folks including The Oregon Attorney, general

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Speaker 1: have made this argument that does The Supreme court wants

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Speaker 1: to set this precedent WHERE aipa can be used by

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Speaker 1: a president in this way because they argue the next

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Speaker 1: president could be A. Democrat and you, know, hypothetically just

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Speaker 1: throwing this out, there what if they declared gun violence

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Speaker 1: in the country to be a national emergency and decided

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Speaker 1: to therefore issue one thousand percent tariffs on all weapons

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Speaker 1: imports and ammunition and everything. Else that would be pretty

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Speaker 1: damning for The republicans to have that situation hanging out.

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Speaker 2: There and if The Supreme court does rule Against, trump

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Speaker 2: it could reshape his trade policy and use of tariffs going.

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Speaker 2: FORWARD i Asked Bloomberg's Brendan murray about how the administration might.

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Speaker 2: ADAPT i doubt.

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Speaker 3: It's going to diminish his impulse to put tariffs on

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Speaker 3: imports to accomplish what he wants to. Accomplish he has

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Speaker 3: a number of other authorities that he can. Use can

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Speaker 3: we talked about the two thirty. Two he's got something

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Speaker 3: Called section three zero, one which is kind of put

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Speaker 3: on industries that are operating unfairly in trading with THE.

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Speaker 3: Us and there's another, authority a sort of obscure. Authority

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Speaker 3: the number is one twenty two and it could be

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Speaker 3: brought in for one hundred and fifty days and the

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Speaker 3: president could put fifteen percent tariffs on anybody's imports if

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Speaker 3: he wants. To, now that's only going to last for

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Speaker 3: one hundred and fifty, days but it could still sort

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Speaker 3: of extend the policy of protectionism that the president wants

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Speaker 3: to deploy out into the. Future so a lot of

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Speaker 3: trade lawyers would say that was no surprise That trump

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Speaker 3: tried at praierly obscure untested legal authority and has at

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Speaker 3: least lost for. Now but there are others that he can.

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Speaker 3: Use they're more, targeted they take longer to, implement there's

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Speaker 3: investigations you have to do to kind of justify while

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Speaker 3: you're putting tariffs on whatever's coming, next semiconductors or, timber you,

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Speaker 3: know other. Things so it was definitely a, setback one

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Speaker 3: that some people in the administration probably didn't, expect and

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Speaker 3: they are now pivoting to this what do we do?

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Speaker 3: Now what about these other? Authorities can we use? Those

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Speaker 3: and we'll see in the days ahead whether they try

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Speaker 3: to deploy.

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Speaker 2: Those what about how this court case is impacting international trade?

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Speaker 2: Negotiations how does it impact THE us government's negotiating power

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Speaker 2: when it's talking to countries Like, China, India European union

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Speaker 2: members right, Now, well.

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Speaker 3: It's ultimately going to slow all these talks. Down if

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Speaker 3: you're sitting on the other side of the table from

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Speaker 3: a counter party that has its main threat over you

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Speaker 3: is being challenged in court and it could be days

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Speaker 3: when court could strike those down and they could no

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Speaker 3: longer use those with, you then your strategy is to

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Speaker 3: delay and to run out the clock on. This and

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Speaker 3: so you would probably see countries try to drag this

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Speaker 3: out as much as they, can at least until there's

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Speaker 3: some clarity in the court case and ultimately or five

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Speaker 3: weeks away From july, ninth and there's still no really

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Speaker 3: no deals, done and so it's going to come down

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Speaker 3: to the wire as to whether they can get any

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Speaker 3: meaningful deals.

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Speaker 2: Done this is The Big take From Bloomberg. News I'm Sarah.

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Speaker 2: Holder to get more From The Big take and unlimited

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