WEBVTT - A Turning Point in Trump’s Trade War

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>How would you describe this moment in the trade war.

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<v Speaker 3>I think we're at a big turning point.

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<v Speaker 2>Brendan Murray leads Bloomberg's trade coverage.

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<v Speaker 3>We're really at an important juncture at the moment where

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

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<v Speaker 3>put leverage on you strategy could be called into question.

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<v Speaker 2>It's a strategy that's become all too predictable. Trump comes

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<v Speaker 2>out swinging with big threats and then pulls back when

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<v Speaker 2>markets react.

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<v Speaker 3>And so the question now is can he keep in

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<v Speaker 3>a sense crying wolf like that, can he keep credibility

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<v Speaker 3>or will countries on the other side say, you know,

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<v Speaker 3>he's just bluffing. If we just ate this out, he

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<v Speaker 3>will rain this back because market pressure will be too great.

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<v Speaker 2>We're more than halfway through the ninety day pause on

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<v Speaker 2>Trump's sweeping reciprocal tariffs. That three month delay was supposed

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<v Speaker 2>to the US time to negotiate trade deals with countries

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<v Speaker 2>around the world. But besides a limited deal with the

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

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<v Speaker 2>there hasn't been much in the way of progress.

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<v Speaker 3>Now, the administration would say talks are advancing with various

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<v Speaker 3>countries Japan, South Korea, India, Switzerland, but otherwise they keep

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<v Speaker 3>saying this every week, that these deals are imminent and

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<v Speaker 3>they're not here yet.

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

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<v Speaker 2>Last week, judges for the US International Trade Court ruled

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<v Speaker 2>that Trump's fentanyl related tariffs on China, Mexico, and Canada,

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<v Speaker 2>and his Liberation Day reciprocal tariffs the marquee policies of

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<v Speaker 2>his trade war are illegal. The Trump administration is appealing

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<v Speaker 2>and exploring other strategies to advance its agenda, but Brendan

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<v Speaker 2>says the legal setback is just the latest sign that

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<v Speaker 2>the US trade war isn't going according to plan.

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<v Speaker 3>We're at the point where the tables are sort of

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<v Speaker 3>turning to where Trump is either going to maintain this

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<v Speaker 3>leverage or it's going to slowly slip into the hands

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<v Speaker 3>of his negotiating counterparties.

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<v Speaker 2>I'm Sarah Holder, and this is the big take from

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

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<v Speaker 2>his credibility face their biggest challenges yet. I speak with

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<v Speaker 2>Brendan Murray to get the latest on tariff negotiations, and

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<v Speaker 2>with Bloomberg's Eric Larsen to dive deeper into the Trade

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<v Speaker 2>Court's ruling and what comes next. The Trump administration may

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<v Speaker 2>have suffered a setback when its reciprocal tariffs were deemed

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<v Speaker 2>illegal last week, but that didn't stop the president from

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<v Speaker 2>announcing a new tariff hike days later. Standing before a

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<v Speaker 2>crowd of US steel workers near Pittsburgh on Friday, he

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<v Speaker 2>said he'd double existing tariffs on steel and aluminum from

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<v Speaker 2>twenty five percent to fifty percent. I asked Bloomberg's Brendan

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<v Speaker 2>Murray about the motivations behind the move.

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<v Speaker 3>Trump said that he hiked these steel and aluminum tariffs

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<v Speaker 3>because he wants to protect this industry as important for

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

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<v Speaker 3>its own aluminum smelters, then we're reliant on a lot

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

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<v Speaker 3>made in the authorities that he used for both the

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<v Speaker 3>reciprocal tariffs that's the universal ten percent tariff on most

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<v Speaker 3>trading partners and the twenty five and now fifty percent

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<v Speaker 3>tariff on steel and aluminum. One is he used an

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<v Speaker 3>authority that's rarely been used. This is the authority that

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<v Speaker 3>the court struck down the other law. The authority that

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<v Speaker 3>he used was called Section two thirty two. It's been

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

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<v Speaker 3>ironclad tariff that you can put on steel and aluminum

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<v Speaker 3>because of national security reasons. So the president suffered this

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

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<v Speaker 3>world that these two thirty two tariffs on steel and

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<v Speaker 3>aluminum that he still has a lot of power over

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<v Speaker 3>setting tariff levels, and we saw him double those to

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<v Speaker 3>fifty percent.

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<v Speaker 2>Well, Trump made the announcement about the steel and aluminum

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<v Speaker 2>tariff hikes at the US Steel plant. What kind of

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<v Speaker 2>reaction did Trump get from the crowd, wells, it.

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<v Speaker 3>Was like a campaign event. The banner behind the stage

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<v Speaker 3>was the Golden Age, referring to sort of the golden

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<v Speaker 3>age of America that he wants to restore. So it

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<v Speaker 3>was a pretty receptive crowd. And of course, you know,

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<v Speaker 3>the steel industry lobby couldn't be happier about the result.

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<v Speaker 3>It may help the profits of steel companies. It may

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<v Speaker 3>protect production lines in states like Pennsylvania and Ohio where

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<v Speaker 3>steel is produced but it's also going to hurt a

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<v Speaker 3>lot of users of steel, the buyers of steel. These

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<v Speaker 3>are the companies that make washing machines and cars and

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<v Speaker 3>construct homes exactly. Construction companies are, you know, among the

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<v Speaker 3>biggest complainers of this that is only going to anger

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<v Speaker 3>countries at exports steel, Korea, Japan, the European Union, the UK.

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<v Speaker 3>The UK did this supposed deal with the administration. What

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<v Speaker 3>happens to their steel exports. So there's a lot of

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<v Speaker 3>questions and it just keeps getting the web keeps getting

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<v Speaker 3>more tangled every single day.

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<v Speaker 2>What other major trade negotiations were playing out in the

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<v Speaker 2>background this weekend? Were there any other major updates on

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<v Speaker 2>the tariffront.

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

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<v Speaker 3>and it's sort of shuttle diplomacy, flying into Washington for

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<v Speaker 3>a couple of days, flying back to their capitals. The

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<v Speaker 3>Japanese are in at least round number four of talks.

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<v Speaker 3>The South Koreans are also pretty well advanced into their discussions.

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<v Speaker 3>Switzerland not an EU country, so it's got to negotiate

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<v Speaker 3>its own deal with the US is apparently getting pretty

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<v Speaker 3>close to a deal as well. India has long been

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<v Speaker 3>said to be among the front runners to get a

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<v Speaker 3>deal before the July ninth deadline. But interestingly, we saw

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<v Speaker 3>right after that court ruling, India sort of step back

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<v Speaker 3>and go, well, wait a second, now, maybe maybe the

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<v Speaker 3>president doesn't have as much leverage over US as he

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<v Speaker 3>used to. If this reciprocal tariff is going to be

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<v Speaker 3>proven illegal. They drew another line in the sand that

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<v Speaker 3>said we we no longer think that the ten percent

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<v Speaker 3>reciprocal tariff on US is acceptable and that has to

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<v Speaker 3>come off if we're going to keep talking. So what

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<v Speaker 3>we've seen is, you know, a lead up to about

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<v Speaker 3>now when the president feels like he's got a lot

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<v Speaker 3>of leverage, but it looks and the experts that we

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<v Speaker 3>talk to say that leverage is slowly slipping away. Time

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<v Speaker 3>is really ticking against the president. You know, he came

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<v Speaker 3>to office as the you know, the deal making president,

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<v Speaker 3>and if he can't deliver on those or he has

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<v Speaker 3>to issue another ninety day delay, you know that credibility

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<v Speaker 3>will be eroded.

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<v Speaker 2>And what about China. China accuse the US of violating

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<v Speaker 2>it's trade truce just today. Can you say more about

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<v Speaker 2>how China US relationship are being strained right now.

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<v Speaker 3>On Friday, when Trump said that China wasn't living up

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<v Speaker 3>to ince end to the bargain, he said something to

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<v Speaker 3>the effect of no more mister nice guy the end

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<v Speaker 3>of his social media post. China has a fairly long

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<v Speaker 3>standing policy of not responding to threats, intimidation, bullying, and

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<v Speaker 3>they're not driven to the negotiating table out of fear,

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<v Speaker 3>or at least that's the perception that the Chinese government

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<v Speaker 3>wants to portray. So what we saw was the Chinese

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<v Speaker 3>Commerce Ministry today saying this is not the kind of

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<v Speaker 3>environment that's helpful for talks to progress. President Trump really

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<v Speaker 3>wants to have a phone call with President she and

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<v Speaker 3>that will help spark negotiations and get things back on track.

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<v Speaker 3>And the Chinese officials who we report on say, we're

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<v Speaker 3>not going to sit down at the negotiating table if

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

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<v Speaker 3>the message that we heard out of Beijing.

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<v Speaker 2>Coming up, I sit down with US legal reporter Eric

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<v Speaker 2>Larson to ask how significant was the Trade Court's ruling

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<v Speaker 2>that deemed many of Trump's tariffs illegal and how will

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<v Speaker 2>that ruling impact the flu of trade negotiations the administration

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<v Speaker 2>is trying to rush through. Eric Larson, legal reporter for Bloomberg,

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<v Speaker 2>thank you so much for being here.

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<v Speaker 1>Yeah, thanks for having me.

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<v Speaker 2>Eric. We saw the biggest challenge yet to Trump's trade

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<v Speaker 2>policies come last week from the courts. Walk us through

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<v Speaker 2>the lawsuits that led us to this consequential ruling in

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<v Speaker 2>the US Court of International Trade. When they were mounted

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<v Speaker 2>and who was behind them? Sure?

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<v Speaker 1>So the tariffs were issued starting in February, and then

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<v Speaker 1>of course the big Liberation Day tariffs Global tariffs in

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<v Speaker 1>early April. And so around April twenty third, a group

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<v Speaker 1>of a dozen Democratic led states filed one of the

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<v Speaker 1>biggest lawsuits challenging them, filing in the Court of Internet

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<v Speaker 1>National Trade, and another group another lawsuit filed by a

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<v Speaker 1>group of small businesses, filed a very similar lawsuit. Those

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<v Speaker 1>cases ended up being consolidated, and the Court of International

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<v Speaker 1>Trade issued this ruling on May twenty eighth, finding that

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<v Speaker 1>the tariffs were in fact illegal and granting what's known

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<v Speaker 1>as a summary judgment against the tariffs without even holding

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<v Speaker 1>a trial. Determined that the facts were very straightforward and

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<v Speaker 1>no trial was necessary.

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<v Speaker 2>What were the central arguments the plaintiffs were making these

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<v Speaker 2>states and these small businesses, why did they think these

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<v Speaker 2>tariffs were illegal?

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<v Speaker 1>Sure, so the way that Trump rolled out these tariffs

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<v Speaker 1>was pretty unprecedented. He used an emergency law passed in

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<v Speaker 1>nineteen seventy seven that grants a president authority over different

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<v Speaker 1>kinds of financial transactions if a national emergency has been declared.

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<v Speaker 1>So what Trump did was declare a series of national

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<v Speaker 1>emergencies and then used this law to issue sweeping tariffs

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<v Speaker 1>against most countries in the world that we do business with.

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<v Speaker 1>Trump decided that the trade imbalance that we have with

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<v Speaker 1>a lot of countries are trade deficits, constituted a national emergency.

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<v Speaker 1>And the States and the groups that sued said, that's

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<v Speaker 1>not what the law is used for. Only Congress has

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<v Speaker 1>control over this level of tariffs and taxes. That's in

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<v Speaker 1>the constitution, and so they said it was illegal.

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<v Speaker 2>So that law that Trump used, the International Emergency Economic

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<v Speaker 2>Powers Act called AIPA of a trade experts, what was

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<v Speaker 2>it created for and what has it been used for

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<v Speaker 2>in the past.

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<v Speaker 1>Well, it's typically been used for sanctions if there were

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<v Speaker 1>a national emergencies, say with a specific country like Iran,

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<v Speaker 1>or a shortage of some sort of products that the

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<v Speaker 1>government decided constituted an emergency. And you know, I looked

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<v Speaker 1>into when it had been used before, and they were

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<v Speaker 1>incidents I never heard of. It's very under the radar.

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<v Speaker 2>So the judges sided with the plaintiffs said that using

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<v Speaker 2>AYEPA in this way was not legal. But the administration

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<v Speaker 2>quickly appealed and a federal appeals court temporarily reinstated the tariffs.

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<v Speaker 2>For now, where do we stand with tariffs while this

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<v Speaker 2>case is working its way through the appeals process and

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<v Speaker 2>what's next?

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<v Speaker 1>Sure, so the tariffs are currently in effect because of

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<v Speaker 1>that stay that was issued by the Court of Appeals

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<v Speaker 1>for the Federal Circuit in Washington, and it was a

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<v Speaker 1>very brief pause. It's an administrative stay. It's called while

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<v Speaker 1>the appeals court considers a longer lasting stay pending appeal,

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<v Speaker 1>which would essentially block the Trade Court's ruling until the

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<v Speaker 1>litigation is resolved. So a pretty long lasting ruling. We

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

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<v Speaker 1>for the appeals court to rule on that motion for

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<v Speaker 1>a stay pending appeal. And it's pretty consequential because the

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<v Speaker 1>fact that the court granted this administrative stay just to

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<v Speaker 1>keep the status quo in place. While it considers this

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

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<v Speaker 1>So there is the possibility that this appeals court could

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<v Speaker 1>deny the stay pending appeal, in which case the tariffs

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<v Speaker 1>would go back into effect.

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<v Speaker 2>It's interesting because we've seen Trump and Trump administration officials

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<v Speaker 2>like Peter Navarro kind of played down the importance of

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<v Speaker 2>this case and this ruling publicly, while also trying very

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<v Speaker 2>hard to get an appeal and saying we needed to

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<v Speaker 2>use these powers to enforce our trade policies. What struck

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<v Speaker 2>you about the response so far?

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<v Speaker 1>It showed a little bit of there were two sides

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<v Speaker 1>of things. That there was what they were saying in

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<v Speaker 1>the court filings and then what they were saying in

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<v Speaker 1>public the court filings, they couldn't have been more clear

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<v Speaker 1>that they considered this ruling by the Trade Court to

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<v Speaker 1>be a massive threat to national security, a threat to

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<v Speaker 1>the president's authority to carry out negotiations with foreign countries,

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<v Speaker 1>saying that undermined President Trump's ability to negotiate all these

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<v Speaker 1>tariff deals and trade deals that of course we've been

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<v Speaker 1>watching the government conduct. That's why they were arguing for

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<v Speaker 1>this stay pending appeal that I mentioned earlier that we

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<v Speaker 1>still are waiting for. They're saying that they need it

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<v Speaker 1>because of how urgent it is, and then of course

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<v Speaker 1>in public they're talking about all the other ways they

0:13:03.880 --> 0:13:06.480
<v Speaker 1>can issue tariffs, and so maybe it's not that big

0:13:06.520 --> 0:13:08.920
<v Speaker 1>of a deal and they're moving forward with the tariffs.

0:13:08.960 --> 0:13:11.560
<v Speaker 2>Well, So, in your assessment, the assessment of your legal

0:13:11.600 --> 0:13:14.720
<v Speaker 2>sources trade experts, how big of a blow would a

0:13:14.840 --> 0:13:17.360
<v Speaker 2>loss on this this court case be for the Trump

0:13:17.400 --> 0:13:19.640
<v Speaker 2>administration and for its tariff policies.

0:13:20.320 --> 0:13:22.560
<v Speaker 1>I think it would be a historic loss for the

0:13:22.559 --> 0:13:26.440
<v Speaker 1>Trump administration if ultimately the Supreme Court upholds the Trade

0:13:26.440 --> 0:13:30.760
<v Speaker 1>Court's decision, because it would represent a big swing by

0:13:30.800 --> 0:13:35.120
<v Speaker 1>Trump's administration being shot down by the highest court in

0:13:35.160 --> 0:13:38.559
<v Speaker 1>the land, which he has a six' three conservative, Majority

0:13:38.600 --> 0:13:40.600
<v Speaker 1>and if they ultimately came down and, said, yes you

0:13:40.640 --> 0:13:44.560
<v Speaker 1>exceeded your, AUTHORITY i think it would probably be seen

0:13:44.600 --> 0:13:47.520
<v Speaker 1>as one of the biggest setbacks of his. Administration And

0:13:47.559 --> 0:13:50.720
<v Speaker 1>i've also spoken with folks including The Oregon Attorney, general

0:13:51.200 --> 0:13:54.400
<v Speaker 1>have made this argument that does The Supreme court wants

0:13:54.559 --> 0:13:58.040
<v Speaker 1>to set this precedent WHERE aipa can be used by

0:13:58.040 --> 0:14:01.760
<v Speaker 1>a president in this way because they argue the next

0:14:01.760 --> 0:14:05.160
<v Speaker 1>president could be A. Democrat and you, know, hypothetically just

0:14:05.440 --> 0:14:08.520
<v Speaker 1>throwing this out, there what if they declared gun violence

0:14:08.679 --> 0:14:11.680
<v Speaker 1>in the country to be a national emergency and decided

0:14:11.720 --> 0:14:16.199
<v Speaker 1>to therefore issue one thousand percent tariffs on all weapons

0:14:16.200 --> 0:14:20.560
<v Speaker 1>imports and ammunition and everything. Else that would be pretty

0:14:20.640 --> 0:14:24.520
<v Speaker 1>damning for The republicans to have that situation hanging out.

0:14:24.560 --> 0:14:28.920
<v Speaker 2>There and if The Supreme court does rule Against, trump

0:14:29.120 --> 0:14:32.760
<v Speaker 2>it could reshape his trade policy and use of tariffs going.

0:14:32.800 --> 0:14:37.720
<v Speaker 2>FORWARD i Asked Bloomberg's Brendan murray about how the administration might.

0:14:37.760 --> 0:14:39.200
<v Speaker 2>ADAPT i doubt.

0:14:39.040 --> 0:14:43.160
<v Speaker 3>It's going to diminish his impulse to put tariffs on

0:14:43.800 --> 0:14:46.640
<v Speaker 3>imports to accomplish what he wants to. Accomplish he has

0:14:46.680 --> 0:14:49.280
<v Speaker 3>a number of other authorities that he can. Use can

0:14:49.680 --> 0:14:52.040
<v Speaker 3>we talked about the two thirty. Two he's got something

0:14:52.080 --> 0:14:55.040
<v Speaker 3>Called section three zero, one which is kind of put

0:14:55.080 --> 0:14:59.320
<v Speaker 3>on industries that are operating unfairly in trading with THE.

0:14:59.440 --> 0:15:03.520
<v Speaker 3>Us and there's another, authority a sort of obscure. Authority

0:15:03.600 --> 0:15:06.880
<v Speaker 3>the number is one twenty two and it could be

0:15:06.920 --> 0:15:09.240
<v Speaker 3>brought in for one hundred and fifty days and the

0:15:09.280 --> 0:15:13.440
<v Speaker 3>president could put fifteen percent tariffs on anybody's imports if

0:15:13.440 --> 0:15:15.200
<v Speaker 3>he wants. To, now that's only going to last for

0:15:15.200 --> 0:15:18.040
<v Speaker 3>one hundred and fifty, days but it could still sort

0:15:18.040 --> 0:15:22.160
<v Speaker 3>of extend the policy of protectionism that the president wants

0:15:22.200 --> 0:15:26.040
<v Speaker 3>to deploy out into the. Future so a lot of

0:15:26.400 --> 0:15:29.480
<v Speaker 3>trade lawyers would say that was no surprise That trump

0:15:29.520 --> 0:15:34.360
<v Speaker 3>tried at praierly obscure untested legal authority and has at

0:15:34.440 --> 0:15:37.480
<v Speaker 3>least lost for. Now but there are others that he can.

0:15:37.640 --> 0:15:41.880
<v Speaker 3>Use they're more, targeted they take longer to, implement there's

0:15:42.000 --> 0:15:45.080
<v Speaker 3>investigations you have to do to kind of justify while

0:15:45.080 --> 0:15:50.320
<v Speaker 3>you're putting tariffs on whatever's coming, next semiconductors or, timber you,

0:15:50.360 --> 0:15:54.520
<v Speaker 3>know other. Things so it was definitely a, setback one

0:15:54.640 --> 0:15:57.720
<v Speaker 3>that some people in the administration probably didn't, expect and

0:15:57.760 --> 0:16:00.560
<v Speaker 3>they are now pivoting to this what do we do?

0:16:00.680 --> 0:16:03.640
<v Speaker 3>Now what about these other? Authorities can we use? Those

0:16:03.760 --> 0:16:06.280
<v Speaker 3>and we'll see in the days ahead whether they try

0:16:06.320 --> 0:16:06.760
<v Speaker 3>to deploy.

0:16:06.800 --> 0:16:12.200
<v Speaker 2>Those what about how this court case is impacting international trade?

0:16:12.240 --> 0:16:16.240
<v Speaker 2>Negotiations how does it impact THE us government's negotiating power

0:16:16.640 --> 0:16:20.800
<v Speaker 2>when it's talking to countries Like, China, India European union

0:16:20.840 --> 0:16:23.080
<v Speaker 2>members right, Now, well.

0:16:22.880 --> 0:16:26.400
<v Speaker 3>It's ultimately going to slow all these talks. Down if

0:16:26.440 --> 0:16:29.520
<v Speaker 3>you're sitting on the other side of the table from

0:16:29.880 --> 0:16:34.000
<v Speaker 3>a counter party that has its main threat over you

0:16:34.560 --> 0:16:37.720
<v Speaker 3>is being challenged in court and it could be days

0:16:37.840 --> 0:16:40.120
<v Speaker 3>when court could strike those down and they could no

0:16:40.200 --> 0:16:44.320
<v Speaker 3>longer use those with, you then your strategy is to

0:16:44.520 --> 0:16:47.520
<v Speaker 3>delay and to run out the clock on. This and

0:16:47.600 --> 0:16:53.000
<v Speaker 3>so you would probably see countries try to drag this

0:16:53.080 --> 0:16:55.360
<v Speaker 3>out as much as they, can at least until there's

0:16:55.360 --> 0:16:59.680
<v Speaker 3>some clarity in the court case and ultimately or five

0:16:59.720 --> 0:17:03.400
<v Speaker 3>weeks away From july, ninth and there's still no really

0:17:03.440 --> 0:17:06.560
<v Speaker 3>no deals, done and so it's going to come down

0:17:06.600 --> 0:17:08.600
<v Speaker 3>to the wire as to whether they can get any

0:17:08.680 --> 0:17:09.880
<v Speaker 3>meaningful deals.

0:17:10.000 --> 0:17:17.520
<v Speaker 2>Done this is The Big take From Bloomberg. News I'm Sarah.

0:17:17.520 --> 0:17:20.560
<v Speaker 2>Holder to get more From The Big take and unlimited

0:17:20.600 --> 0:17:24.080
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0:17:24.119 --> 0:17:27.600
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0:17:27.720 --> 0:17:30.440
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