Speaker 1: Bloomberg Audio Studios, podcasts, radio news. We got seed by
Speaker 1: Schley's bags. I know him well. That are very outside
Speaker 1: country China centric, but outside country centric.
Speaker 2: Where were you when the opinion was finally announced today?
Speaker 3: Where else? On a conference call?
Speaker 2: Rick Woldenberg is the CEO of a toy company called
Speaker 2: Learning Resources, a company that sued the Trump administration over
Speaker 2: its signature tariff policy back in April. The case went
Speaker 2: all the way to the Supreme Court. Rick wasn't expecting
Speaker 2: the court to issue its opinion today. Rick Son, who
Speaker 2: also works for the company, broke the news and he.
Speaker 3: Said, hold on, hold on, we just won the case.
Speaker 2: In a six to three ruling, the court sided with
Speaker 2: Rick and his fellow plaintiffs, declaring many of the presidents
Speaker 2: sweeping tariffs illegal. It also said the court didn't have
Speaker 2: jurisdiction over Rick's particular case, a technicalcality, but he calls
Speaker 2: that a footnote to history.
Speaker 3: A lot of times when history is made, you don't realize, hey,
Speaker 3: I just made history. But in this case, from the beginning,
Speaker 3: we knew we were involved in something that would have
Speaker 3: a long tail and would affect the trajectory of our country.
Speaker 2: The Supreme Court's decision was a direct rebuke of President
Speaker 2: Donald Trump's attempts to use broad emergency powers to reshape
Speaker 2: global trade. It reaffirmed that only Congress has the power
Speaker 2: to impose tariffs during peacetime.
Speaker 1: I'm ashamed of certain members of the court, absolutely ashamed
Speaker 1: for not having the courage to do what's right for
Speaker 1: our country.
Speaker 2: Trump called a press conference to respond to the decision,
Speaker 2: where he vowed to sign an immediate order imposing a
Speaker 2: new ten percent global tariff using a different legal authority.
Speaker 1: We have alternatives. Great alternatives. Could be more money. We'll
Speaker 1: take in more money, but.
Speaker 2: What comes next is less. The Supreme Court didn't give
Speaker 2: guidance on what happens to the tariffs that have already
Speaker 2: been collected, which Trump addressed in a question from a
Speaker 2: reporter at his press conference.
Speaker 1: Wouldn't you think they would have put one sentence in
Speaker 1: there saying that keep the money or don't keep the money? Right,
Speaker 1: I guess it has to get litigated for the next
Speaker 1: two years.
Speaker 3: This reversed segears guys, and give him my money back.
Speaker 3: The US government sends out millions of tax refunds a year,
Speaker 3: and no one when they opened the check goes, oh
Speaker 3: my god, how did they do that. That's a marvel.
Speaker 3: They know how to do it. They can do it.
Speaker 3: It's our money, give it back.
Speaker 2: I'm Sarah Holder, and this is the big take for
Speaker 2: Bloomberg News today on the show. The Supreme Court rules
Speaker 2: against Trump on tariffs. But the decision means for consumers, businesses,
Speaker 2: global trade, and presidential power. This Supreme Court, to say,
Speaker 2: has been highly anticipated, both because President Trump's use of
Speaker 2: tariffs is such an important piece of his economic policy
Speaker 2: and because it's seen as yet another way he sought
Speaker 2: to expand his powers as president.
Speaker 4: It's really a huge blow. President Trump stood out in
Speaker 4: the Rose Garden a little over ten months ago and
Speaker 4: told us that that tariffs were going to essentially revitalize
Speaker 4: American manufacturing, which has been in about a three decade
Speaker 4: downward spiral. This was going to create jobs, This was
Speaker 4: going to level the playing field with trading partners that
Speaker 4: he said were cheating the US in the global trading system.
Speaker 2: Brendon Murray oversees Bloomberg's global trade coverage.
Speaker 4: And so he embarked on this campaign to issue these
Speaker 4: tariffs broadly, often pretty much at his own discretion on
Speaker 4: everything from countries that he disagreed with their geopolitical decisions
Speaker 4: to countries that you know, he thought had a bureaucratic
Speaker 4: problems with the way they were treating American companies in
Speaker 4: the case of Canada. So striking this down is a
Speaker 4: big blow to the president. He has based his entire
Speaker 4: economic and geopolitical foreign policy agenda on tariffs and his
Speaker 4: ability to use them at will.
Speaker 2: The Supreme Court didn't say that President Trump can't impose
Speaker 2: any tariffs. This case was about the way Trump has
Speaker 2: justified imposing many of the tariffs he's put in place
Speaker 2: since returning to office. He's leaned on a law called
Speaker 2: the International Emergency Economic Powers Act or iep up. Here's
Speaker 2: Bloomberg Supreme Court reporter Greg Storr.
Speaker 5: This nineteen seventy seven law gives the president certain powers
Speaker 5: in the case of economic emergencies, and that law doesn't
Speaker 5: mention tariffs. But the President has said it gives an
Speaker 5: authority to enact these sweeping tariffs, and that includes his
Speaker 5: so called reciprocal tariffs that he announced on what he
Speaker 5: described as Liberation Day in April. And what the Supreme
Speaker 5: Court said today was that law does not give the
Speaker 5: president authority to imposed tariffs, and so it means that
Speaker 5: all the tariffs he imposed under that law are now invalid.
Speaker 5: Left open some other questions like what about refund for
Speaker 5: people who paid them? Lower courts will decide that. And
Speaker 5: it didn't knock out other forms of authority that he
Speaker 5: has also asserted, but it knocked out the biggest single
Speaker 5: pillar in his tariff policy.
Speaker 2: And there was dissent among the justices. Right, this was
Speaker 2: a six' to three. Opinion what was the substance of the, Disagreement, well.
Speaker 5: The core question was whether this statute could be read
Speaker 5: to include tariff. Powers AS i, said it doesn't mention the,
Speaker 5: word but it does have a phrase that says The
Speaker 5: president during these economic emergencies may regulate. Importation and that
Speaker 5: was really kind of the key legal question for the
Speaker 5: court was whether that could be read or should be
Speaker 5: read to encompass the authority to impose. Tariffs and so
Speaker 5: the three dissenters said, yes that regulating importation includes, tariffs
Speaker 5: and the, majority although they splintered a little bit in their,
Speaker 5: reasoning essentially, said, look If congress wants to give the
Speaker 5: power to impose tariffs to the, president keep in mind
Speaker 5: by the way The constitution, says It's congress's. Power but
Speaker 5: If congress wants to give the president that, power the
Speaker 5: majority said it knows how to do that, explicitly and
Speaker 5: it didn't do that in this, statute and so we're
Speaker 5: not going to read it in a way that gives
Speaker 5: the president such expansive.
Speaker 2: Authority, Well, greg one of the big things that The
Speaker 2: court didn't weigh in, on which you alluded, to is
Speaker 2: the issue of, refunds whether or not the money that
Speaker 2: has already been collected under these tariffs will now have
Speaker 2: to be returned to the companies that have paid. It
Speaker 2: tell me a bit about this decision not to weigh
Speaker 2: in on, refunds right. Now why did they do, that
Speaker 2: at least.
Speaker 5: As a formal. Matter it wasn't really in front of.
Speaker 5: Them they talked about it during the arguments because they
Speaker 5: were interested in what the consequences of their decision would
Speaker 5: be if they struck down the, tariffs but nobody was
Speaker 5: asking them to rule on, that and perhaps more more,
Speaker 5: importantly no lower court had said anything about how refunds would.
Speaker 5: Work that's the kind of situation where The Supreme court
Speaker 5: normally doesn't like to be the first one to weigh.
Speaker 5: In they want to let lower courts deal with stuff,
Speaker 5: first and SO i would have been quite surprised if
Speaker 5: they had said something about, refunds just because it would
Speaker 5: have been so unusual for.
Speaker 2: Them Brendon trump has vowed to replace these tariffs with new.
Speaker 2: Ones what are his options?
Speaker 4: Here if you dial this back twelve months ago or,
Speaker 4: so when the second term, began there were people in
Speaker 4: the administration who wanted to go this other, route this
Speaker 4: more legally sound, route and not to come out with
Speaker 4: THESE aepa tariffs that they would be. Challenged and so
Speaker 4: there is a playbook for what comes, next and they
Speaker 4: can try to replicate the tariff wall that he's built
Speaker 4: around THE us. Economy it just may be more of
Speaker 4: a patchwork process than a broad use of tariffs the
Speaker 4: way he's done so Since april of last. Year the
Speaker 4: one that most people point, to Including Bloomberg, economics is
Speaker 4: this what they Call section one point twenty. Two this
Speaker 4: is an authority that they can use to address trade deficit, problems,
Speaker 4: imbalances but it only goes up to fifteen. Percent you,
Speaker 4: know there are some countries whose apatero's now. Illegal you,
Speaker 4: know we're over fifteen, percent so they can go up
Speaker 4: to fifteen, percent and it's capped at one hundred and fifty,
Speaker 4: days and so they're temporary and they need congressional authorization
Speaker 4: to be. Extended so this is just one of the
Speaker 4: examples of the ways that The trump administration can kind
Speaker 4: of create a bridge to buy themselves some.
Speaker 2: Time given the uncertainty about how this will impact trade
Speaker 2: policy moving forward at this, juncture have markets reacted to
Speaker 2: the news.
Speaker 4: Yet markets don't really know what to make of it.
Speaker 4: Yet it seems to be good for the stocks of
Speaker 4: companies that have paid a lot of tariffs that they
Speaker 4: will presumably get some refunds over the next six to
Speaker 4: twelve months or, so but there's also a realization that
Speaker 4: tariffs aren't going, away and there's going to be some
Speaker 4: uncertainty about how this next wave of them will be.
Speaker 4: Administered and so companies don't like. Uncertainty they tend to
Speaker 4: sit on their, hands not, invest not, Hire consumers tend
Speaker 4: to sort of reign in their. Spending so the markets
Speaker 4: don't really know what to make of it just. Yet
Speaker 4: there's a lot of trying to wait and see what
Speaker 4: the president's going to do.
Speaker 2: Next so what will the president do, next what new
Speaker 2: tariffs might he? Impose and will THE us government have
Speaker 2: to refund the money it's.
Speaker 6: Collected that's after the break, greg after the decision.
Speaker 2: Today what actually happens? Next are the impacted tariffs immediately removed.
Speaker 5: In terms of seeing an immediate practical impact where goods
Speaker 5: start coming into the country without those. Tariffs we have
Speaker 5: to wait to see exactly what. Happens but they are,
Speaker 5: unlawful the ones that have been, imposed and it, does
Speaker 5: as we've, alluded to trigger this refund. Process that has
Speaker 5: some questions to, it for, sure but everybody who paid
Speaker 5: one of those tariffs so far can SAY i shouldn't
Speaker 5: have had to pay. It that was, illegal.
Speaker 2: Right you said that the lower courts will have to
Speaker 2: decide on that question of how the tariff refund process.
Speaker 2: Goes In kavno's, descent he said the process would likely
Speaker 2: be a quote. Mess is there any precedent for refunding
Speaker 2: tariffs like? This and how much of a mess could
Speaker 2: it actually?
Speaker 5: Be so THAT i want to be a little cautious
Speaker 5: because it really remains to be. Seen there are some,
Speaker 5: precedents not on, terraffs but there was this tax known
Speaker 5: as the harbor maintenance tax back in the late nineteen,
Speaker 5: nineties where there was a process for refunding very large
Speaker 5: sums of, money not this. Big so this is all
Speaker 5: going to go forward in a specialized court known as
Speaker 5: The court Of International. Trade they do have procedures for
Speaker 5: dealing with, refunds and they're very familiar with, tariffs but
Speaker 5: there will undoubtedly still be a lot of questions among other.
Speaker 5: Things you, know some tariffs were paid almost a year,
Speaker 5: ago and they may be in a slightly different boat
Speaker 5: than tariffs that were paid last. WEEK a number of,
Speaker 5: companies about fifteen, hundred according to my Colleague Zoe, tillman
Speaker 5: have sort of preemptively filed claim saying we're entitled to
Speaker 5: a bunch of. Refunds that doesn't preclude other payers from
Speaker 5: claiming those refunds as. Well and it's not yet clear
Speaker 5: that what argument The trump administration might, make if, anything
Speaker 5: for saying that some or all these people are not
Speaker 5: entitled to. Refunds at the, moment it looks like at
Speaker 5: least most of those folks are in line for. Refunds
Speaker 5: but it's going to take a while to play it
Speaker 5: for things to play.
Speaker 2: Out so that's what this decision might mean for. Companies But,
Speaker 2: brendan should consumers expect lower prices on the goods that
Speaker 2: were impacted to the extent that companies raised prices as
Speaker 2: a result of these, tariffs is it likely that they'll
Speaker 2: lower them?
Speaker 4: NOW i wouldn't count on. It companies at the moment
Speaker 4: are that have paid these. Tariffs if they can get a,
Speaker 4: refund they're going to do a lot of things that
Speaker 4: they've held back on doing over the past year or.
Speaker 4: So SO i wouldn't expect this to have any sort
Speaker 4: of short term impact on the price of consumer. Items
Speaker 4: As greg spelled out, there this is going to be
Speaker 4: a long drawn, out messy. Process don't forget a lot
Speaker 4: of companies importers that paid these tariffs had arrangements with
Speaker 4: their suppliers overseas to you, know the suppliers themselves overseas will, say,
Speaker 4: hey you KNOW i cut my price because you had
Speaker 4: to pay this. Tariff you, know those suppliers are going
Speaker 4: to want a piece of that action. Back so this
Speaker 4: is just going to create a really complicated. Situation Bloomberg
Speaker 4: economics estimates that the amount OF iepa tariffs that could
Speaker 4: be subject to refunds is about one hundred and seventy billion.
Speaker 4: Dollars let's call that two hundred billion on an annualized.
Speaker 4: Basis that's a little less than THE irs gives out
Speaker 4: in tax refunds every year it, can it. Can it
Speaker 4: ranges from a couple hundred billion to four hundred. Billion
Speaker 4: so that's.
Speaker 2: Something the government knows how to do.
Speaker 4: Well THE irs knows how to do that because that's
Speaker 4: sort of what THE irs. Does The customs And Border
Speaker 4: Protection agency is not in the business of shelling out
Speaker 4: hundreds of billions of dollars of. Refunds so the administration
Speaker 4: of that is going to have to get up to
Speaker 4: scale very. Quickly if the, companies as we, expect you,
Speaker 4: know thousands of, them will try to come to The
Speaker 4: Customs agency and ask for their money.
Speaker 2: Back and just to put a finer point on what
Speaker 2: this means for, consumers you, know obviously not all Of
Speaker 2: trump's tariffs have been struck down by this. Ruling what
Speaker 2: is the effective tariff rate that consumers will face after
Speaker 2: THE aepa tariffs go?
Speaker 4: Away so the effective tariff rate WITH aipa in effect
Speaker 4: was about thirteen or fourteen. Percent that's sort of a
Speaker 4: broad average over ALL us. Imports it varies by, country,
Speaker 4: obviously but WITHOUT, iepa it goes from thirteen percent to
Speaker 4: something in the range of six to seven, Percent so
Speaker 4: essentially it gets cut in. Half so again we'll wait
Speaker 4: and see what the administration, does but they're still going
Speaker 4: to remain elevated higher than they were Before trump begans
Speaker 4: and his second term they were down in the two
Speaker 4: to three percent.
Speaker 2: Range And, BRENDAN i want to go back to what
Speaker 2: this all means For President, trump because tariffs have been
Speaker 2: such a central part of his economic. Agenda how does
Speaker 2: this change his ability to threaten other countries willy nilly
Speaker 2: with immediate. Tariffs does it weaken his negotiating? Position that
Speaker 2: would be his.
Speaker 4: Argument you, know the president of The United states has
Speaker 4: a lot of other non tariff powers that they can
Speaker 4: bring to the table in foreign. Policy but the real
Speaker 4: issue here is That President trump is going to have
Speaker 4: to restrain that impulse to use tariffs at every turn
Speaker 4: to try to sway countries to his. Ideology another thing
Speaker 4: we shouldn't overlook here is the opportunity that this provides him.
Speaker 4: Too you, know we've been talking a lot about tariff's
Speaker 4: effects on the, economy the, economy you, know hasn't exactly
Speaker 4: been going gangbusters of, late And republicans In congress are
Speaker 4: hearing it from their, constituents and ratcheting back tariffs isn't
Speaker 4: such a bad thing for the president politically heading into
Speaker 4: these mid term. Elections dialing them, down bringing them on
Speaker 4: board more, slowly using more discretion might actually help the
Speaker 4: economy and might help sentiment and pull consumer confidence. Out
Speaker 4: so there's a flip side to this that's not all
Speaker 4: bad for the president.
Speaker 2: And GREG a conservative majority court has just struck down
Speaker 2: one of the president's key. POLICIES i want to underline
Speaker 2: that for a, second when we think about the balance
Speaker 2: of The court's decisions and against The trump administration and
Speaker 2: the expansion of presidential, powers how does today's opinion change
Speaker 2: the picture for you if at.
Speaker 5: All the Way i'm thinking about it is that this
Speaker 5: is a case Where Donald trump just pushed The Supreme
Speaker 5: court too. Far he has made all manner of claims
Speaker 5: of presidential power that we haven't seen, before and The
Speaker 5: Supreme court over the last year has been pretty, accommodating
Speaker 5: not on every single, thing but over and, over at
Speaker 5: least on a short term, basis with these emergency requests
Speaker 5: to do various things involving immigration and spending and. Firing
Speaker 5: The court has let him do what he wanted to
Speaker 5: do for the most. Part but here when we were
Speaker 5: looking at what's a pretty fundamental question about separation of,
Speaker 5: powers where The constitution, says this is a power That congress,
Speaker 5: has The Supreme court, said including two members of The
Speaker 5: court who were appointed By Donald trump And Neil, Gorsich
Speaker 5: Nami Coney, barrett said, no, you the, president do not
Speaker 5: have this authority by using this statute that doesn't even
Speaker 5: talk about, tariffs and that is a big. Deal so
Speaker 5: there's no question that this is a line The court
Speaker 5: has drawn with the. President don't minimize everything else The
Speaker 5: court has. Done This court has still been very very,
Speaker 5: accommodating but at least on this sort of unprecedented assertion
Speaker 5: of presidential, authority The court is, saying, no you can't do.
Speaker 2: That this is the big take From Bloomberg. News I'm Sarah.
Speaker 2: Holder the show is hosted By, Me David, gera And Juan.
Speaker 2: Hawk the show is made By Aaron, Edwards David, Fox Jeff,
Speaker 2: Grocott Eleanor, Harrison, Dengate Patti, Hirsch Rachel, Lewis, Krisky katie,
Speaker 2: Mcmurran Naomi Julia, Press Tracy, Samuelson Naomi, Shaven Alex, Sugiera Julia,
Speaker 2: Weaver Yang, yong and Take. Yasuzawa there's much more On
Speaker 2: bloomberg dot. Com get unlimited access to all of our
Speaker 2: coverage at a special rate for listeners At bloomberg Dot
Speaker 2: com slash, podcast offering thanks for. Listening we'll be back On.
Speaker 2: Monday