WEBVTT - SCOTUS Strikes Down Trump’s Tariffs

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. We got seed by

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<v Speaker 1>Schley's bags. I know him well. That are very outside

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<v Speaker 1>country China centric, but outside country centric.

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<v Speaker 2>Where were you when the opinion was finally announced today?

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<v Speaker 3>Where else? On a conference call?

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<v Speaker 2>Rick Woldenberg is the CEO of a toy company called

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<v Speaker 2>Learning Resources, a company that sued the Trump administration over

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<v Speaker 2>its signature tariff policy back in April. The case went

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<v Speaker 2>all the way to the Supreme Court. Rick wasn't expecting

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<v Speaker 2>the court to issue its opinion today. Rick Son, who

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<v Speaker 2>also works for the company, broke the news and he.

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<v Speaker 3>Said, hold on, hold on, we just won the case.

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<v Speaker 2>In a six to three ruling, the court sided with

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<v Speaker 2>Rick and his fellow plaintiffs, declaring many of the presidents

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<v Speaker 2>sweeping tariffs illegal. It also said the court didn't have

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<v Speaker 2>jurisdiction over Rick's particular case, a technicalcality, but he calls

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<v Speaker 2>that a footnote to history.

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<v Speaker 3>A lot of times when history is made, you don't realize, hey,

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<v Speaker 3>I just made history. But in this case, from the beginning,

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<v Speaker 3>we knew we were involved in something that would have

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<v Speaker 3>a long tail and would affect the trajectory of our country.

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<v Speaker 2>The Supreme Court's decision was a direct rebuke of President

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<v Speaker 2>Donald Trump's attempts to use broad emergency powers to reshape

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<v Speaker 2>global trade. It reaffirmed that only Congress has the power

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<v Speaker 2>to impose tariffs during peacetime.

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<v Speaker 1>I'm ashamed of certain members of the court, absolutely ashamed

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<v Speaker 1>for not having the courage to do what's right for

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<v Speaker 1>our country.

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<v Speaker 2>Trump called a press conference to respond to the decision,

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<v Speaker 2>where he vowed to sign an immediate order imposing a

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<v Speaker 2>new ten percent global tariff using a different legal authority.

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<v Speaker 1>We have alternatives. Great alternatives. Could be more money. We'll

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<v Speaker 1>take in more money, but.

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<v Speaker 2>What comes next is less. The Supreme Court didn't give

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<v Speaker 2>guidance on what happens to the tariffs that have already

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<v Speaker 2>been collected, which Trump addressed in a question from a

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<v Speaker 2>reporter at his press conference.

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<v Speaker 1>Wouldn't you think they would have put one sentence in

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<v Speaker 1>there saying that keep the money or don't keep the money? Right,

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<v Speaker 1>I guess it has to get litigated for the next

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<v Speaker 1>two years.

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<v Speaker 3>This reversed segears guys, and give him my money back.

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<v Speaker 3>The US government sends out millions of tax refunds a year,

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<v Speaker 3>and no one when they opened the check goes, oh

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<v Speaker 3>my god, how did they do that. That's a marvel.

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<v Speaker 3>They know how to do it. They can do it.

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<v Speaker 3>It's our money, give it back.

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

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<v Speaker 2>Bloomberg News today on the show. The Supreme Court rules

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<v Speaker 2>against Trump on tariffs. But the decision means for consumers, businesses,

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<v Speaker 2>global trade, and presidential power. This Supreme Court, to say,

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<v Speaker 2>has been highly anticipated, both because President Trump's use of

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<v Speaker 2>tariffs is such an important piece of his economic policy

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<v Speaker 2>and because it's seen as yet another way he sought

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<v Speaker 2>to expand his powers as president.

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<v Speaker 4>It's really a huge blow. President Trump stood out in

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<v Speaker 4>the Rose Garden a little over ten months ago and

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<v Speaker 4>told us that that tariffs were going to essentially revitalize

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<v Speaker 4>American manufacturing, which has been in about a three decade

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<v Speaker 4>downward spiral. This was going to create jobs, This was

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<v Speaker 4>going to level the playing field with trading partners that

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<v Speaker 4>he said were cheating the US in the global trading system.

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<v Speaker 2>Brendon Murray oversees Bloomberg's global trade coverage.

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<v Speaker 4>And so he embarked on this campaign to issue these

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<v Speaker 4>tariffs broadly, often pretty much at his own discretion on

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<v Speaker 4>everything from countries that he disagreed with their geopolitical decisions

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<v Speaker 4>to countries that you know, he thought had a bureaucratic

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<v Speaker 4>problems with the way they were treating American companies in

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<v Speaker 4>the case of Canada. So striking this down is a

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<v Speaker 4>big blow to the president. He has based his entire

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<v Speaker 4>economic and geopolitical foreign policy agenda on tariffs and his

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<v Speaker 4>ability to use them at will.

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<v Speaker 2>The Supreme Court didn't say that President Trump can't impose

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<v Speaker 2>any tariffs. This case was about the way Trump has

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<v Speaker 2>justified imposing many of the tariffs he's put in place

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<v Speaker 2>since returning to office. He's leaned on a law called

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<v Speaker 2>the International Emergency Economic Powers Act or iep up. Here's

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<v Speaker 2>Bloomberg Supreme Court reporter Greg Storr.

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<v Speaker 5>This nineteen seventy seven law gives the president certain powers

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<v Speaker 5>in the case of economic emergencies, and that law doesn't

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<v Speaker 5>mention tariffs. But the President has said it gives an

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<v Speaker 5>authority to enact these sweeping tariffs, and that includes his

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<v Speaker 5>so called reciprocal tariffs that he announced on what he

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<v Speaker 5>described as Liberation Day in April. And what the Supreme

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<v Speaker 5>Court said today was that law does not give the

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<v Speaker 5>president authority to imposed tariffs, and so it means that

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<v Speaker 5>all the tariffs he imposed under that law are now invalid.

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<v Speaker 5>Left open some other questions like what about refund for

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<v Speaker 5>people who paid them? Lower courts will decide that. And

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<v Speaker 5>it didn't knock out other forms of authority that he

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<v Speaker 5>has also asserted, but it knocked out the biggest single

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<v Speaker 5>pillar in his tariff policy.

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<v Speaker 2>And there was dissent among the justices. Right, this was

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<v Speaker 2>a six' to three. Opinion what was the substance of the, Disagreement, well.

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<v Speaker 5>The core question was whether this statute could be read

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<v Speaker 5>to include tariff. Powers AS i, said it doesn't mention the,

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<v Speaker 5>word but it does have a phrase that says The

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<v Speaker 5>president during these economic emergencies may regulate. Importation and that

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<v Speaker 5>was really kind of the key legal question for the

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<v Speaker 5>court was whether that could be read or should be

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<v Speaker 5>read to encompass the authority to impose. Tariffs and so

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<v Speaker 5>the three dissenters said, yes that regulating importation includes, tariffs

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<v Speaker 5>and the, majority although they splintered a little bit in their,

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<v Speaker 5>reasoning essentially, said, look If congress wants to give the

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<v Speaker 5>power to impose tariffs to the, president keep in mind

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<v Speaker 5>by the way The constitution, says It's congress's. Power but

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<v Speaker 5>If congress wants to give the president that, power the

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<v Speaker 5>majority said it knows how to do that, explicitly and

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<v Speaker 5>it didn't do that in this, statute and so we're

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<v Speaker 5>not going to read it in a way that gives

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<v Speaker 5>the president such expansive.

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<v Speaker 2>Authority, Well, greg one of the big things that The

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<v Speaker 2>court didn't weigh in, on which you alluded, to is

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<v Speaker 2>the issue of, refunds whether or not the money that

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<v Speaker 2>has already been collected under these tariffs will now have

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<v Speaker 2>to be returned to the companies that have paid. It

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<v Speaker 2>tell me a bit about this decision not to weigh

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<v Speaker 2>in on, refunds right. Now why did they do, that

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<v Speaker 2>at least.

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<v Speaker 5>As a formal. Matter it wasn't really in front of.

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<v Speaker 5>Them they talked about it during the arguments because they

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<v Speaker 5>were interested in what the consequences of their decision would

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<v Speaker 5>be if they struck down the, tariffs but nobody was

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<v Speaker 5>asking them to rule on, that and perhaps more more,

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<v Speaker 5>importantly no lower court had said anything about how refunds would.

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<v Speaker 5>Work that's the kind of situation where The Supreme court

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<v Speaker 5>normally doesn't like to be the first one to weigh.

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<v Speaker 5>In they want to let lower courts deal with stuff,

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<v Speaker 5>first and SO i would have been quite surprised if

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<v Speaker 5>they had said something about, refunds just because it would

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<v Speaker 5>have been so unusual for.

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<v Speaker 2>Them Brendon trump has vowed to replace these tariffs with new.

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<v Speaker 2>Ones what are his options?

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<v Speaker 4>Here if you dial this back twelve months ago or,

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<v Speaker 4>so when the second term, began there were people in

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<v Speaker 4>the administration who wanted to go this other, route this

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<v Speaker 4>more legally sound, route and not to come out with

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<v Speaker 4>THESE aepa tariffs that they would be. Challenged and so

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<v Speaker 4>there is a playbook for what comes, next and they

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<v Speaker 4>can try to replicate the tariff wall that he's built

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<v Speaker 4>around THE us. Economy it just may be more of

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<v Speaker 4>a patchwork process than a broad use of tariffs the

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<v Speaker 4>way he's done so Since april of last. Year the

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<v Speaker 4>one that most people point, to Including Bloomberg, economics is

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<v Speaker 4>this what they Call section one point twenty. Two this

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<v Speaker 4>is an authority that they can use to address trade deficit, problems,

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<v Speaker 4>imbalances but it only goes up to fifteen. Percent you,

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<v Speaker 4>know there are some countries whose apatero's now. Illegal you,

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<v Speaker 4>know we're over fifteen, percent so they can go up

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<v Speaker 4>to fifteen, percent and it's capped at one hundred and fifty,

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<v Speaker 4>days and so they're temporary and they need congressional authorization

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<v Speaker 4>to be. Extended so this is just one of the

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<v Speaker 4>examples of the ways that The trump administration can kind

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<v Speaker 4>of create a bridge to buy themselves some.

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<v Speaker 2>Time given the uncertainty about how this will impact trade

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<v Speaker 2>policy moving forward at this, juncture have markets reacted to

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<v Speaker 2>the news.

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<v Speaker 4>Yet markets don't really know what to make of it.

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<v Speaker 4>Yet it seems to be good for the stocks of

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<v Speaker 4>companies that have paid a lot of tariffs that they

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<v Speaker 4>will presumably get some refunds over the next six to

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<v Speaker 4>twelve months or, so but there's also a realization that

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<v Speaker 4>tariffs aren't going, away and there's going to be some

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<v Speaker 4>uncertainty about how this next wave of them will be.

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<v Speaker 4>Administered and so companies don't like. Uncertainty they tend to

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<v Speaker 4>sit on their, hands not, invest not, Hire consumers tend

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<v Speaker 4>to sort of reign in their. Spending so the markets

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<v Speaker 4>don't really know what to make of it just. Yet

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<v Speaker 4>there's a lot of trying to wait and see what

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<v Speaker 4>the president's going to do.

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<v Speaker 2>Next so what will the president do, next what new

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<v Speaker 2>tariffs might he? Impose and will THE us government have

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<v Speaker 2>to refund the money it's.

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<v Speaker 6>Collected that's after the break, greg after the decision.

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<v Speaker 2>Today what actually happens? Next are the impacted tariffs immediately removed.

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<v Speaker 5>In terms of seeing an immediate practical impact where goods

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<v Speaker 5>start coming into the country without those. Tariffs we have

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<v Speaker 5>to wait to see exactly what. Happens but they are,

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<v Speaker 5>unlawful the ones that have been, imposed and it, does

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<v Speaker 5>as we've, alluded to trigger this refund. Process that has

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<v Speaker 5>some questions to, it for, sure but everybody who paid

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<v Speaker 5>one of those tariffs so far can SAY i shouldn't

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<v Speaker 5>have had to pay. It that was, illegal.

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<v Speaker 2>Right you said that the lower courts will have to

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<v Speaker 2>decide on that question of how the tariff refund process.

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<v Speaker 2>Goes In kavno's, descent he said the process would likely

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<v Speaker 2>be a quote. Mess is there any precedent for refunding

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<v Speaker 2>tariffs like? This and how much of a mess could

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<v Speaker 2>it actually?

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<v Speaker 5>Be so THAT i want to be a little cautious

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<v Speaker 5>because it really remains to be. Seen there are some,

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<v Speaker 5>precedents not on, terraffs but there was this tax known

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<v Speaker 5>as the harbor maintenance tax back in the late nineteen,

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<v Speaker 5>nineties where there was a process for refunding very large

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<v Speaker 5>sums of, money not this. Big so this is all

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<v Speaker 5>going to go forward in a specialized court known as

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<v Speaker 5>The court Of International. Trade they do have procedures for

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<v Speaker 5>dealing with, refunds and they're very familiar with, tariffs but

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<v Speaker 5>there will undoubtedly still be a lot of questions among other.

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<v Speaker 5>Things you, know some tariffs were paid almost a year,

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<v Speaker 5>ago and they may be in a slightly different boat

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<v Speaker 5>than tariffs that were paid last. WEEK a number of,

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<v Speaker 5>companies about fifteen, hundred according to my Colleague Zoe, tillman

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<v Speaker 5>have sort of preemptively filed claim saying we're entitled to

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<v Speaker 5>a bunch of. Refunds that doesn't preclude other payers from

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<v Speaker 5>claiming those refunds as. Well and it's not yet clear

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<v Speaker 5>that what argument The trump administration might, make if, anything

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<v Speaker 5>for saying that some or all these people are not

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<v Speaker 5>entitled to. Refunds at the, moment it looks like at

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<v Speaker 5>least most of those folks are in line for. Refunds

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<v Speaker 5>but it's going to take a while to play it

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<v Speaker 5>for things to play.

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<v Speaker 2>Out so that's what this decision might mean for. Companies But,

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<v Speaker 2>brendan should consumers expect lower prices on the goods that

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<v Speaker 2>were impacted to the extent that companies raised prices as

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<v Speaker 2>a result of these, tariffs is it likely that they'll

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<v Speaker 2>lower them?

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<v Speaker 4>NOW i wouldn't count on. It companies at the moment

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<v Speaker 4>are that have paid these. Tariffs if they can get a,

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<v Speaker 4>refund they're going to do a lot of things that

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<v Speaker 4>they've held back on doing over the past year or.

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<v Speaker 4>So SO i wouldn't expect this to have any sort

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<v Speaker 4>of short term impact on the price of consumer. Items

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<v Speaker 4>As greg spelled out, there this is going to be

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<v Speaker 4>a long drawn, out messy. Process don't forget a lot

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<v Speaker 4>of companies importers that paid these tariffs had arrangements with

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<v Speaker 4>their suppliers overseas to you, know the suppliers themselves overseas will, say,

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<v Speaker 4>hey you KNOW i cut my price because you had

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<v Speaker 4>to pay this. Tariff you, know those suppliers are going

0:13:18.920 --> 0:13:21.680
<v Speaker 4>to want a piece of that action. Back so this

0:13:21.840 --> 0:13:25.640
<v Speaker 4>is just going to create a really complicated. Situation Bloomberg

0:13:25.720 --> 0:13:30.240
<v Speaker 4>economics estimates that the amount OF iepa tariffs that could

0:13:30.240 --> 0:13:33.480
<v Speaker 4>be subject to refunds is about one hundred and seventy billion.

0:13:33.600 --> 0:13:37.560
<v Speaker 4>Dollars let's call that two hundred billion on an annualized.

0:13:37.559 --> 0:13:40.720
<v Speaker 4>Basis that's a little less than THE irs gives out

0:13:40.720 --> 0:13:43.600
<v Speaker 4>in tax refunds every year it, can it. Can it

0:13:43.760 --> 0:13:46.720
<v Speaker 4>ranges from a couple hundred billion to four hundred. Billion

0:13:46.840 --> 0:13:47.320
<v Speaker 4>so that's.

0:13:47.160 --> 0:13:48.600
<v Speaker 2>Something the government knows how to do.

0:13:48.960 --> 0:13:51.200
<v Speaker 4>Well THE irs knows how to do that because that's

0:13:51.200 --> 0:13:53.560
<v Speaker 4>sort of what THE irs. Does The customs And Border

0:13:53.640 --> 0:13:57.960
<v Speaker 4>Protection agency is not in the business of shelling out

0:13:58.520 --> 0:14:02.160
<v Speaker 4>hundreds of billions of dollars of. Refunds so the administration

0:14:02.280 --> 0:14:04.360
<v Speaker 4>of that is going to have to get up to

0:14:04.840 --> 0:14:10.199
<v Speaker 4>scale very. Quickly if the, companies as we, expect you,

0:14:10.240 --> 0:14:13.559
<v Speaker 4>know thousands of, them will try to come to The

0:14:13.640 --> 0:14:15.640
<v Speaker 4>Customs agency and ask for their money.

0:14:15.640 --> 0:14:17.480
<v Speaker 2>Back and just to put a finer point on what

0:14:17.480 --> 0:14:20.440
<v Speaker 2>this means for, consumers you, know obviously not all Of

0:14:20.480 --> 0:14:23.360
<v Speaker 2>trump's tariffs have been struck down by this. Ruling what

0:14:23.480 --> 0:14:28.560
<v Speaker 2>is the effective tariff rate that consumers will face after

0:14:28.560 --> 0:14:29.720
<v Speaker 2>THE aepa tariffs go?

0:14:29.760 --> 0:14:33.560
<v Speaker 4>Away so the effective tariff rate WITH aipa in effect

0:14:34.120 --> 0:14:37.360
<v Speaker 4>was about thirteen or fourteen. Percent that's sort of a

0:14:37.400 --> 0:14:41.160
<v Speaker 4>broad average over ALL us. Imports it varies by, country,

0:14:41.200 --> 0:14:45.840
<v Speaker 4>obviously but WITHOUT, iepa it goes from thirteen percent to

0:14:46.280 --> 0:14:48.880
<v Speaker 4>something in the range of six to seven, Percent so

0:14:49.400 --> 0:14:52.920
<v Speaker 4>essentially it gets cut in. Half so again we'll wait

0:14:52.960 --> 0:14:55.960
<v Speaker 4>and see what the administration, does but they're still going

0:14:56.000 --> 0:15:00.000
<v Speaker 4>to remain elevated higher than they were Before trump begans

0:15:00.040 --> 0:15:01.760
<v Speaker 4>and his second term they were down in the two

0:15:01.760 --> 0:15:02.440
<v Speaker 4>to three percent.

0:15:02.560 --> 0:15:04.600
<v Speaker 2>Range And, BRENDAN i want to go back to what

0:15:04.640 --> 0:15:06.960
<v Speaker 2>this all means For President, trump because tariffs have been

0:15:07.000 --> 0:15:10.560
<v Speaker 2>such a central part of his economic. Agenda how does

0:15:10.600 --> 0:15:14.080
<v Speaker 2>this change his ability to threaten other countries willy nilly

0:15:14.200 --> 0:15:18.800
<v Speaker 2>with immediate. Tariffs does it weaken his negotiating? Position that

0:15:18.840 --> 0:15:19.360
<v Speaker 2>would be his.

0:15:19.520 --> 0:15:23.640
<v Speaker 4>Argument you, know the president of The United states has

0:15:23.680 --> 0:15:26.640
<v Speaker 4>a lot of other non tariff powers that they can

0:15:26.680 --> 0:15:31.320
<v Speaker 4>bring to the table in foreign. Policy but the real

0:15:31.360 --> 0:15:34.360
<v Speaker 4>issue here is That President trump is going to have

0:15:34.440 --> 0:15:39.160
<v Speaker 4>to restrain that impulse to use tariffs at every turn

0:15:39.480 --> 0:15:43.920
<v Speaker 4>to try to sway countries to his. Ideology another thing

0:15:44.320 --> 0:15:48.120
<v Speaker 4>we shouldn't overlook here is the opportunity that this provides him.

0:15:48.160 --> 0:15:50.720
<v Speaker 4>Too you, know we've been talking a lot about tariff's

0:15:50.720 --> 0:15:54.800
<v Speaker 4>effects on the, economy the, economy you, know hasn't exactly

0:15:55.520 --> 0:16:00.200
<v Speaker 4>been going gangbusters of, late And republicans In congress are

0:16:00.200 --> 0:16:05.760
<v Speaker 4>hearing it from their, constituents and ratcheting back tariffs isn't

0:16:05.800 --> 0:16:09.120
<v Speaker 4>such a bad thing for the president politically heading into

0:16:09.160 --> 0:16:14.200
<v Speaker 4>these mid term. Elections dialing them, down bringing them on

0:16:14.280 --> 0:16:20.160
<v Speaker 4>board more, slowly using more discretion might actually help the

0:16:20.200 --> 0:16:25.120
<v Speaker 4>economy and might help sentiment and pull consumer confidence. Out

0:16:25.200 --> 0:16:28.240
<v Speaker 4>so there's a flip side to this that's not all

0:16:28.320 --> 0:16:29.720
<v Speaker 4>bad for the president.

0:16:30.120 --> 0:16:33.640
<v Speaker 2>And GREG a conservative majority court has just struck down

0:16:33.840 --> 0:16:37.160
<v Speaker 2>one of the president's key. POLICIES i want to underline

0:16:37.320 --> 0:16:39.520
<v Speaker 2>that for a, second when we think about the balance

0:16:39.880 --> 0:16:44.160
<v Speaker 2>of The court's decisions and against The trump administration and

0:16:44.200 --> 0:16:48.440
<v Speaker 2>the expansion of presidential, powers how does today's opinion change

0:16:48.480 --> 0:16:49.680
<v Speaker 2>the picture for you if at.

0:16:49.680 --> 0:16:53.040
<v Speaker 5>All the Way i'm thinking about it is that this

0:16:53.120 --> 0:16:55.400
<v Speaker 5>is a case Where Donald trump just pushed The Supreme

0:16:55.440 --> 0:16:59.960
<v Speaker 5>court too. Far he has made all manner of claims

0:17:00.120 --> 0:17:04.040
<v Speaker 5>of presidential power that we haven't seen, before and The

0:17:04.080 --> 0:17:06.920
<v Speaker 5>Supreme court over the last year has been pretty, accommodating

0:17:07.000 --> 0:17:09.679
<v Speaker 5>not on every single, thing but over and, over at

0:17:09.760 --> 0:17:13.119
<v Speaker 5>least on a short term, basis with these emergency requests

0:17:13.160 --> 0:17:18.840
<v Speaker 5>to do various things involving immigration and spending and. Firing

0:17:19.160 --> 0:17:21.439
<v Speaker 5>The court has let him do what he wanted to

0:17:21.480 --> 0:17:24.959
<v Speaker 5>do for the most. Part but here when we were

0:17:25.000 --> 0:17:28.639
<v Speaker 5>looking at what's a pretty fundamental question about separation of,

0:17:28.680 --> 0:17:33.680
<v Speaker 5>powers where The constitution, says this is a power That congress,

0:17:33.760 --> 0:17:37.959
<v Speaker 5>has The Supreme court, said including two members of The

0:17:38.000 --> 0:17:41.240
<v Speaker 5>court who were appointed By Donald trump And Neil, Gorsich

0:17:41.320 --> 0:17:46.040
<v Speaker 5>Nami Coney, barrett said, no, you the, president do not

0:17:46.200 --> 0:17:48.960
<v Speaker 5>have this authority by using this statute that doesn't even

0:17:49.000 --> 0:17:52.879
<v Speaker 5>talk about, tariffs and that is a big. Deal so

0:17:53.359 --> 0:17:55.960
<v Speaker 5>there's no question that this is a line The court

0:17:56.000 --> 0:18:00.840
<v Speaker 5>has drawn with the. President don't minimize everything else The

0:18:00.880 --> 0:18:03.120
<v Speaker 5>court has. Done This court has still been very very,

0:18:03.119 --> 0:18:07.040
<v Speaker 5>accommodating but at least on this sort of unprecedented assertion

0:18:07.119 --> 0:18:09.919
<v Speaker 5>of presidential, authority The court is, saying, no you can't do.

0:18:10.040 --> 0:18:17.080
<v Speaker 2>That this is the big take From Bloomberg. News I'm Sarah.

0:18:17.160 --> 0:18:20.880
<v Speaker 2>Holder the show is hosted By, Me David, gera And Juan.

0:18:20.960 --> 0:18:25.040
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0:18:25.080 --> 0:18:30.200
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0:18:30.280 --> 0:18:37.320
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0:18:37.359 --> 0:18:41.720
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0:18:41.760 --> 0:18:45.080
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0:18:48.560 --> 0:18:52.679
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0:18:52.720 --> 0:18:53.080
<v Speaker 2>Monday