WEBVTT - Fed Governor Resigns & Tariff Battles 0:00:02.880 --> 0:00:07.120 This is Bloomberg Law with June Grosseo from Bloomberg Radio. 0:00:10.520 --> 0:00:13.480 I have an open spot or the Federal Reserve Board. 0:00:13.760 --> 0:00:14.960 I'm very happy about that. 0:00:15.520 --> 0:00:18.960 President Donald Trump suddenly has a chance to fill an 0:00:19.000 --> 0:00:23.360 opening at the Federal Reserve earlier than expected, after FED 0:00:23.440 --> 0:00:28.920 Governor Adrianna Kugler announced her resignation on Friday. Kugler's exit 0:00:29.080 --> 0:00:33.640 unfolds amid unprecedented political pressure from the White House on 0:00:33.720 --> 0:00:38.559 the Central Bank over monetary policy, with Trump often launching 0:00:38.640 --> 0:00:42.840 personal insults at your own Powell. The current chair joining 0:00:42.840 --> 0:00:47.120 me is Catherine Judge, a professor at Columbia Law School. Kate, 0:00:47.240 --> 0:00:50.240 what's your reaction to Kugler's departure. 0:00:50.720 --> 0:00:55.440 I was surprised she is the next governor to leave. Naturally, 0:00:55.680 --> 0:00:59.240 her term expires early in twenty twenty six, so it's 0:00:59.280 --> 0:01:01.760 clearly a spot that President Trump is going to be 0:01:01.800 --> 0:01:06.560 able to have available in the relatively near future. But 0:01:06.680 --> 0:01:11.319 this short window of time changes dynamics in a meaningful way. 0:01:12.040 --> 0:01:14.720 Among other things, her spot was seen as a like 0:01:14.800 --> 0:01:18.000 b position for the person that President Trump would like 0:01:18.040 --> 0:01:20.400 to bring in to be the next chair, So this 0:01:20.440 --> 0:01:24.360 really potentially accelerates that process and could lead to even 0:01:24.400 --> 0:01:28.440 more intense pressure on Powell to step down from his 0:01:28.520 --> 0:01:29.600 position as chair. 0:01:30.480 --> 0:01:34.280 When President Trump was leaving the White House on Friday, 0:01:35.000 --> 0:01:37.360 he said that he was very happy to have an 0:01:37.400 --> 0:01:40.759 open spot, and he told reporters that she was stepping 0:01:40.800 --> 0:01:44.480 down because she disagreed with quote too late on the 0:01:44.560 --> 0:01:48.720 interest rates. That's his derogatory term for Powell. But does 0:01:48.720 --> 0:01:51.280 that align with her publicly stated views. 0:01:51.840 --> 0:01:55.960 We have not seen anything to that effect in what 0:01:56.080 --> 0:02:00.160 she has stated publicly. We have seen disagreement with Van 0:02:00.200 --> 0:02:04.320 Koogler and Michael Barr on the one hand, and other 0:02:04.440 --> 0:02:08.240 members of the board on the other hand. Are matters 0:02:08.320 --> 0:02:12.560 of regulation, and it does look as though the current board, 0:02:12.880 --> 0:02:17.160 under the effective leadership of a vice chare for supervision 0:02:17.240 --> 0:02:20.240 Michelle Bowman, is going to engage in a deregulatory agenda. 0:02:20.400 --> 0:02:22.040 So on that front, it does look like there was 0:02:22.080 --> 0:02:24.840 a difference of opinion, But that's not necessarily a reason 0:02:24.880 --> 0:02:27.600 for her to accelerate her departure. If anything, that's the 0:02:27.600 --> 0:02:29.920 reason for her to stick around and to let her 0:02:30.000 --> 0:02:31.240 voice and vote be heard. 0:02:32.000 --> 0:02:34.919 Trump says he's going to appoint the next FED governor. 0:02:35.320 --> 0:02:37.720 Will you explain why he basically has to appoint the 0:02:37.760 --> 0:02:41.320 next FED governor to fill her spot, so. 0:02:42.080 --> 0:02:46.960 He has to choose the chair among the governors. Powell's 0:02:47.040 --> 0:02:51.280 term as chair expires in May of next year. His 0:02:51.440 --> 0:02:55.160 term his governor doesn't expire until twenty twenty eight. It 0:02:55.240 --> 0:02:58.280 is possible that Powell stepped down as governor at the 0:02:58.280 --> 0:03:01.639 same time he sets down share, but that is by 0:03:01.639 --> 0:03:06.679 no means guaranteed, and because there are no other additional 0:03:06.680 --> 0:03:12.040 slots open, Chris Waller, who's a Republican who Trump previously 0:03:12.120 --> 0:03:16.160 put on the Board of Governors, is a possibility or 0:03:16.280 --> 0:03:19.960 FED chair, as if he wants to promote Waller, then 0:03:19.960 --> 0:03:23.600 he wouldn't need to use this slot for purposes of 0:03:23.720 --> 0:03:26.560 introducing somebody who would then take over as chair. But 0:03:26.840 --> 0:03:29.560 if he does want Kevin Hassett or Kevin warsh or 0:03:29.600 --> 0:03:32.320 any of the other names that have been bandied about, 0:03:32.880 --> 0:03:36.280 this slot might be his critical opportunity. 0:03:36.920 --> 0:03:40.880 Are there any indications as to whom he's favoring for 0:03:40.920 --> 0:03:41.280 the role. 0:03:42.040 --> 0:03:46.640 There's been rumors that hast has been taking over as lead. 0:03:46.800 --> 0:03:50.160 Kevin Worsh's names has been around for a long time. 0:03:50.560 --> 0:03:54.640 We have certainly seen both of them actively campaigning for 0:03:54.760 --> 0:03:58.480 the job in their public statements have been very supportive 0:03:58.680 --> 0:04:02.280 of the lower interesting streat policies that Trump would otherwise 0:04:02.360 --> 0:04:04.840 like to see in place, But we have heard nothing 0:04:04.880 --> 0:04:09.000 official from the White House the respect who's likely to 0:04:09.000 --> 0:04:10.120 be the next comanee. 0:04:10.320 --> 0:04:13.720 The Open Market Committee voted nine to two to leave 0:04:13.840 --> 0:04:19.080 rates unchanged, so one more vote won't necessarily make a difference. 0:04:19.720 --> 0:04:21.640 It's hard to know. I mean, then this is really hard. 0:04:21.680 --> 0:04:24.160 So first of all, the site is already facing an 0:04:24.279 --> 0:04:27.920 environment in which they might be changing course independent of 0:04:27.960 --> 0:04:31.400 a new chair coming in. The most recent jobs numbers 0:04:31.440 --> 0:04:34.240 look weaker than they expected, and there have been some 0:04:34.279 --> 0:04:37.400 revisions for a variety of reasons to think that there 0:04:37.440 --> 0:04:41.240 might have already been a modest changing course underway. But 0:04:41.279 --> 0:04:42.640 you're right, I mean, one of the key things to 0:04:42.680 --> 0:04:45.240 keep in mind is the Federal Open Market Committee is 0:04:45.240 --> 0:04:49.080 a twelve member committee, and the chair or kind of 0:04:49.120 --> 0:04:53.120 the expected chair, is only one of those votes. As 0:04:53.200 --> 0:04:55.240 one of the things that Trump past to kind of 0:04:55.320 --> 0:04:56.840 keep in mind, and that we all have to keep 0:04:56.880 --> 0:04:59.680 in mind as we're watching, is how effective is the 0:04:59.720 --> 0:05:04.880 new going to be garnering support for a meaningfully different 0:05:04.880 --> 0:05:07.240 trajectory for policy. And that's going to be one of 0:05:07.240 --> 0:05:10.640 the open questions as something new comes in, both what 0:05:10.839 --> 0:05:13.160 is the interest rate corrector they want to see and 0:05:13.520 --> 0:05:16.080 what are the tools they're going to use to try 0:05:16.080 --> 0:05:19.320 to convince fella members of the Federal Open Market Committee, 0:05:19.560 --> 0:05:22.360 But actually a different policy courses for the best in. 0:05:22.320 --> 0:05:26.000 The past have fed Governor's not been able to convince 0:05:26.920 --> 0:05:29.520 the Open Market Committee to do what they want. 0:05:30.080 --> 0:05:34.560 What we haven't seen in the past is quite as 0:05:34.680 --> 0:05:39.240 clear of a mismatch between what the President wants to 0:05:39.279 --> 0:05:42.560 see happen and what the current interust rate policy is. 0:05:43.240 --> 0:05:46.920 So we've certainly seen nominees come in because they are 0:05:46.960 --> 0:05:50.479 meant to kind of change the directory. Paul Volker famously 0:05:50.560 --> 0:05:55.200 was appointed because there was suddenly an appreciation that inflation 0:05:55.560 --> 0:05:59.839 and managing inflation had to be the priority. That being said, 0:06:00.240 --> 0:06:03.719 that was an insight that the Board also shared and 0:06:03.760 --> 0:06:06.040 that President shared. So we did have some struggle at 0:06:06.080 --> 0:06:08.760 times with aspects of his policy getting the level of 0:06:08.760 --> 0:06:12.200 support he wanted. On the other hand, he was actually 0:06:12.240 --> 0:06:16.000 pushing against the president, pushing against short term political will 0:06:16.640 --> 0:06:19.320 and pushing for kind of a longer term vision than 0:06:19.360 --> 0:06:22.200 aligned with the core mission of the Federal Reserve, which 0:06:22.200 --> 0:06:26.240 is fighting inflation and promoting maximum employment. So in that instance, 0:06:26.440 --> 0:06:30.160 it was a very different set of dynamics. So this 0:06:30.240 --> 0:06:32.919 is a different type of transition because we have a 0:06:32.960 --> 0:06:36.680 president who had just been so outspoken for such a 0:06:36.720 --> 0:06:41.400 long time about wanting monetary policy to look dramatically different 0:06:41.440 --> 0:06:42.120 than it has. 0:06:42.520 --> 0:06:46.240 Have you ever seen this kind of pressure from the 0:06:46.279 --> 0:06:48.200 White House on the FED. 0:06:48.000 --> 0:06:51.600 Chair, No, No one has. We've certainly seen pressure from 0:06:51.600 --> 0:06:53.839 the White House on the FED chair in the past, 0:06:53.880 --> 0:06:56.280 and on the pig reserve in the past. The classic 0:06:56.320 --> 0:07:01.039 concern is that the president always wants monetary policy to 0:07:01.080 --> 0:07:04.520 be some more accommodative than the said oftentimes wants it 0:07:04.560 --> 0:07:06.880 to be. There's certain times that those interests are allives. 0:07:07.000 --> 0:07:10.800 During a depression, during difficult times, accommodated monetary policy is 0:07:10.840 --> 0:07:13.480 the right policy given the FEDS du a manadate. But 0:07:13.560 --> 0:07:17.040 in moments like now, where the Fed's looking long term 0:07:17.080 --> 0:07:18.960 and trying to think about what does it need to 0:07:19.000 --> 0:07:22.040 do to make sure that it successfully fights off the 0:07:22.720 --> 0:07:26.360 reason bout of inflation, there's a possibility for conflict, and 0:07:26.400 --> 0:07:30.920 so LBJ famously kind of pushed around William mcchezie martinin. 0:07:31.280 --> 0:07:34.440 So we've certainly seen presidents in those past that have 0:07:34.480 --> 0:07:37.120 pushed around FED chairs and pushed around the FED, and 0:07:37.160 --> 0:07:40.400 that's because they oftentimes do want monetary policy to be 0:07:40.440 --> 0:07:45.600 somewhat more commodative. Then is prudence given the medium to 0:07:45.680 --> 0:07:49.760 longer term interest in trying to mainstain stable prices. And 0:07:49.760 --> 0:07:52.400 that's when those conflicts have come into place. But what 0:07:52.480 --> 0:07:57.040 we haven't seen is this type of continual pressure where 0:07:57.200 --> 0:08:01.120 the FED chair is really targeted in an ongoing and 0:08:01.200 --> 0:08:04.560 repeated way, and where the President isn't just suggesting that 0:08:04.640 --> 0:08:07.600 rate should be a little lower or that monetary condition 0:08:07.640 --> 0:08:11.120 should be somewhat more accommodative, but is really seeking but 0:08:11.280 --> 0:08:14.480 seems to be a very different approach to monetary policy 0:08:15.000 --> 0:08:17.680 than the current Federal Reserve is pursuing at a time 0:08:17.680 --> 0:08:20.040 where there is still some reason at least to worry 0:08:20.040 --> 0:08:20.760 about inflation. 0:08:21.320 --> 0:08:25.800 The nominee, whoever Trump chooses, will have to be confirmed 0:08:25.800 --> 0:08:29.360 by the Senate. But if that person is then chosen 0:08:29.480 --> 0:08:34.480 as the chair that does or doesn't need Senate confirmation. 0:08:34.400 --> 0:08:37.440 That also is a Senate confirmation process. And there's also 0:08:37.480 --> 0:08:39.959 this additional oddity this person is going to face kind 0:08:39.960 --> 0:08:43.920 of the ringer. There's a Senate confirmation to fulfill the 0:08:44.000 --> 0:08:47.439 remainder of Coogler's term. But the way this sat a 0:08:47.520 --> 0:08:52.640 reserve works oftentimes for agencies, once you are confirmed, you 0:08:52.840 --> 0:08:56.640 have a period in office that dates from when you 0:08:56.679 --> 0:08:59.040 are confirms You might have five years from the time 0:08:59.080 --> 0:09:02.040 you actually take office. For example. The way the fatal 0:09:02.080 --> 0:09:05.560 reserve works is there are these fourteen year terms on 0:09:05.640 --> 0:09:08.920 a staggered basis, and they are fourteen year terms in 0:09:09.000 --> 0:09:12.320 part to limit the ability of anyone president to appoint 0:09:12.320 --> 0:09:16.280 too many different governors, but partly because of that distinct 0:09:16.280 --> 0:09:21.280 staggered structure. When somebody is nominated to fulfill a seat 0:09:21.400 --> 0:09:24.240 for somebody who's leaving before their end of the term, 0:09:24.720 --> 0:09:28.600 as Cooper is, they only are confirmed to the end 0:09:29.360 --> 0:09:33.439 of that term. So in theory, if this person manages 0:09:33.600 --> 0:09:38.560 to go through hearings and confirmations in time to fill 0:09:38.600 --> 0:09:42.200 the seat before it naturally become vacant, there might have 0:09:42.240 --> 0:09:45.000 to be a nominal second process to have a person 0:09:45.000 --> 0:09:47.599 actually confirmed again when the term expires. 0:09:48.360 --> 0:09:52.040 Trump on Friday call for the Board of Governors to 0:09:52.720 --> 0:09:55.360 usurp the power of the FED chair. He said in 0:09:55.400 --> 0:09:58.600 all caps, the board should assume control and do what 0:09:58.679 --> 0:10:00.920 everyone knows has to do be done. 0:10:01.160 --> 0:10:02.640 I mean, there's a lot of things to say there. 0:10:02.679 --> 0:10:05.679 So first of all, as we were discussing earlier, each 0:10:05.760 --> 0:10:09.720 member of the FMC is not just the board the FOMC. 0:10:09.800 --> 0:10:12.440 The Federal Up the Market Committee, which determines monetary policy, 0:10:13.040 --> 0:10:15.839 is a twelve member committee, so all seven members of 0:10:15.880 --> 0:10:18.680 the board governors have votes on that committee, but so 0:10:18.800 --> 0:10:22.199 do five presidents. So the policy makers involved are not 0:10:22.240 --> 0:10:26.760 just governors, and the governors are exercising their independent judgments. 0:10:26.920 --> 0:10:30.760 We saw two governors actually dissent and they did suggest 0:10:30.840 --> 0:10:34.960 that more accommodative monetary policy was appropriate, but we saw 0:10:35.000 --> 0:10:37.559 the rest of the governors go along and actually agree 0:10:37.600 --> 0:10:42.800 with Powell that the preferred approach was the right approach 0:10:42.880 --> 0:10:43.200 to take. 0:10:44.520 --> 0:10:49.080 The Supreme Court in a May decision suggested that Trump 0:10:49.240 --> 0:10:53.280 couldn't remove Powell because of policy disagreements. Is there any 0:10:53.320 --> 0:10:57.840 feeling for whether the administration is still trying to get 0:10:57.920 --> 0:10:58.679 him removed. 0:10:59.240 --> 0:11:02.199 Yeah, there's two different issues. So one we did to 0:11:02.320 --> 0:11:06.320 be this effort with the renovations, which really looks pretextable. Right. 0:11:06.880 --> 0:11:09.520 What we know is Trump wants lower interest rates. He 0:11:09.600 --> 0:11:12.600 blames Powells for the interest rates being what they are, 0:11:13.080 --> 0:11:15.600 and so he was looking at the cost overruns and 0:11:15.679 --> 0:11:18.680 trying to use that as potentially a basist for removing 0:11:18.720 --> 0:11:22.120 Powell for cause that has seemed to have passed at 0:11:22.200 --> 0:11:25.400 least modestly passed. But it does suggest that Trump might 0:11:25.440 --> 0:11:29.200 still be on the lookout for other pretextual grounds for removal. 0:11:29.559 --> 0:11:32.520 The other issue that remains an issue particularly and actually 0:11:32.559 --> 0:11:35.640 becomes more of a live issue since Coopler is stepping down, 0:11:36.640 --> 0:11:40.520 is might he try to appoint somebody else as chair 0:11:41.000 --> 0:11:44.400 and not remove Powell but merely demote Powell? And here 0:11:44.440 --> 0:11:48.480 are the laws little tricky and the Supreme Court decision 0:11:48.520 --> 0:11:50.480 which wasn't even really a decision as part of their 0:11:50.520 --> 0:11:54.120 shadow docket, did it resolve the question of whether Powell 0:11:54.120 --> 0:11:58.319 can be devoted. The statutory language is very clear governors 0:11:58.400 --> 0:12:00.760 of the SUTA Reserve can be moved from the role 0:12:00.800 --> 0:12:04.880 of governors only for cost, so there's very clear statutory protection. 0:12:04.960 --> 0:12:08.000 There By contrast, the chair and the various vie chairs 0:12:08.320 --> 0:12:11.080 have four year terms. The vote is to fourteen year 0:12:11.200 --> 0:12:15.000 terms and there's no explicit four cause removal protection. There's 0:12:15.200 --> 0:12:18.720 arguments that he can still be demoted only for cause 0:12:18.800 --> 0:12:21.560 and not for policy. Differences, but there is a real 0:12:21.679 --> 0:12:24.880 risk that that legal question will be tested in a 0:12:25.360 --> 0:12:29.040 more pressing way now that the window of time between 0:12:29.080 --> 0:12:31.480 when he can get a new nominee onto the board 0:12:32.280 --> 0:12:35.079 and when Powell's terms chair comes to a natural end. 0:12:35.600 --> 0:12:38.800 Now that the window is to come Bonger, this falls. 0:12:38.520 --> 0:12:42.280 Into the more questions than answers category. Thanks so much, Catherine. 0:12:42.559 --> 0:12:45.679 That's Professor Catherine Judge of Columbia Law School. 0:12:46.200 --> 0:12:49.400 The US Treasury has taken in one hundred and fifty 0:12:49.440 --> 0:12:52.680 billion dollars from tariffs, and we'll be adding about two 0:12:52.720 --> 0:12:57.680 hundred billion dollars next month, four totals that nobody's ever 0:12:57.720 --> 0:12:58.400 seen before. 0:12:58.760 --> 0:13:03.959 Frankly, the challengers to President Trump's tariffs say they rest 0:13:04.040 --> 0:13:07.679 on a quote breath taking claim to power that no 0:13:07.840 --> 0:13:11.560 president has asserted in two hundred years, and a federal 0:13:11.600 --> 0:13:16.160 appeals court appeared skeptical about Trump's authority to issue the 0:13:16.240 --> 0:13:20.400 sweeping global tariffs under an emergency law that has never 0:13:20.440 --> 0:13:24.120 been used for that purpose and doesn't even mention tariffs. 0:13:24.640 --> 0:13:28.120 In May, the U s Court of International Trade ruled 0:13:28.120 --> 0:13:32.079 that the vast majority of President Trump's levies were issued 0:13:32.120 --> 0:13:35.840 illegally and ordered them blocked. The Federal Circuit Court of 0:13:35.880 --> 0:13:40.520 Appeals gave the Trump administration a temporary reprieve, but during 0:13:40.559 --> 0:13:44.240 the high stakes oral arguments last week before the circuit's 0:13:44.520 --> 0:13:48.920 entire slate of eleven active judges, it appeared that several 0:13:49.000 --> 0:13:54.200 were skeptical of the government's arguments. A decision finding against 0:13:54.240 --> 0:13:58.480 the tariffs will almost certainly be appealed to the Supreme Court. 0:13:59.320 --> 0:14:02.320 My guest is Simmy Garula, a professor at Notre Dame 0:14:02.400 --> 0:14:06.360 Law School and the former Undersecretary for Enforcement at the 0:14:06.360 --> 0:14:10.280 Department of the Treasury. Jimmy, will you start by explaining 0:14:10.800 --> 0:14:15.760 what authority President Trump is using to impose these tariffs. 0:14:16.320 --> 0:14:20.520 Now, President Trump is using a law called the International 0:14:20.560 --> 0:14:25.720 Emergency Economic Powers Act, and it goes by the acrony 0:14:25.920 --> 0:14:32.720 i EPA, and IIPA does authorize the President to impose 0:14:33.280 --> 0:14:39.000 economic sanctions on individuals, entities, even countries in response to 0:14:39.600 --> 0:14:45.720 an unusual and extraordinary emergency. So that's the precondition for 0:14:45.960 --> 0:14:50.840 the exercise of these economic sanctions. The President has to 0:14:50.840 --> 0:14:55.720 declare that there is an unusual and extraordinary emergency that 0:14:55.840 --> 0:14:59.280 has its source in whole or in substantial part outside 0:14:59.360 --> 0:15:05.400 the United State, and further that threatens national security, foreign policy, 0:15:05.600 --> 0:15:09.240 or the economy of the United States. So that's the 0:15:09.280 --> 0:15:13.080 statute that the president is relying upon. There's a couple 0:15:13.120 --> 0:15:17.240 of very serious problems with using IIPA. First and foremost, 0:15:17.360 --> 0:15:22.520 AIPA never mentions tariffs. The word tariff does not occur 0:15:23.280 --> 0:15:28.240 even one time in the text of the statute. And second, 0:15:28.840 --> 0:15:34.000 AIPA was enacted to Congress in nineteen seventy seven, and 0:15:34.480 --> 0:15:39.360 no president in the history of AIPA has ever cited 0:15:39.400 --> 0:15:44.040 AIPA as the authority to authorize the position of tariffs. 0:15:44.080 --> 0:15:47.200 So this is the only president in the entire history 0:15:47.760 --> 0:15:53.359 of AIPA that's ever cited aipa's authority for imposing tariffs 0:15:53.480 --> 0:15:54.480 on foreign countries. 0:15:55.040 --> 0:15:58.800 The challenges here were a group of democratic led states 0:15:58.840 --> 0:16:02.360 and small businesses. Is what was their basic argument. 0:16:03.440 --> 0:16:07.320 Their basic argument was, first that a EPA just doesn't apply, 0:16:07.880 --> 0:16:10.800 that it does not provide authority for the president to 0:16:10.840 --> 0:16:13.880 impose economic sanctions. And again for the reason the basic 0:16:13.960 --> 0:16:17.720 particulate character i'll mention of the statute, no president has 0:16:17.720 --> 0:16:21.600 ever used a EPA to justify the imposition of terrorists, 0:16:21.640 --> 0:16:24.440 So that's argument number one. Argument number two is that 0:16:24.560 --> 0:16:28.680 even if AEFA did apply that there's some serious questions 0:16:28.720 --> 0:16:32.080 about whether or not the president is properly using or 0:16:32.200 --> 0:16:35.440 satisfied the requirements of a EPA. You know, for example, 0:16:36.040 --> 0:16:43.520 what is the unusual and extraordinary emergency that justifies economic 0:16:43.640 --> 0:16:49.120 sanctions in the form of terrorists? And here the president 0:16:49.760 --> 0:16:57.200 has articulated many different so called emergency. On the one hand, 0:16:57.480 --> 0:17:00.520 it's a trade deficit, you know, that's the unusual exurin 0:17:00.600 --> 0:17:05.000 or emergency. On the other hand, it's the fetanyl crisis, 0:17:05.240 --> 0:17:10.000 the importation of the fetanyl from Mexico, Canada and China. 0:17:10.840 --> 0:17:14.520 And the third yes, and even cited immigration. You know, 0:17:14.560 --> 0:17:20.040 the immigration is the emergency. But first there's a question about, well, 0:17:20.760 --> 0:17:25.400 is a trade deficit really an unusual insternary emergency. We've 0:17:25.400 --> 0:17:30.160 had trade deficits with countries around the world for decades. 0:17:30.240 --> 0:17:33.800 I mean, that's nothing new. Trade deficit with China, trade 0:17:33.800 --> 0:17:38.320 deficit with Mexico, Canada, with the EU, that's nothing new. 0:17:38.560 --> 0:17:43.760 So what is so usual and extraordinary about trade deficits today? 0:17:44.240 --> 0:17:48.080 That again triggers the application of a EPOS. And then 0:17:48.200 --> 0:17:51.280 there's another problem with the actual application of the statute. 0:17:51.480 --> 0:17:53.800 And when we look at the feedinyl crisis, for example, 0:17:54.520 --> 0:17:58.919 approximately eighty eight percent of fetanol that consumed in the 0:17:59.000 --> 0:18:02.560 United States comes to across the Mexican border, the border 0:18:02.920 --> 0:18:07.280 with the US and Mexico. Only eight percent comes across 0:18:07.320 --> 0:18:11.720 the Canadian board. So if AIPA is being used or 0:18:11.760 --> 0:18:18.280 the emergency is fetnol involving the importation from Canada, Canada 0:18:18.600 --> 0:18:22.480 is only responsible for a very small percentage of fetnol 0:18:22.920 --> 0:18:26.600 coming across the US Canada borders. But there doesn't appear 0:18:26.720 --> 0:18:30.080 to be a nexus or a close nexus between the 0:18:30.080 --> 0:18:34.440 so called crisis and the targets of the tariffs and 0:18:34.480 --> 0:18:37.400 the sanctioned They are being closed on various countries. 0:18:37.760 --> 0:18:40.280 So what was the government's response to that. 0:18:41.080 --> 0:18:45.960 One response is that, well, this involves foreign affairs, and 0:18:46.040 --> 0:18:49.080 in the area of foreign affairs, the Supreme Court is 0:18:49.119 --> 0:18:52.919 recognized that the president has sundery powers. You know, the 0:18:52.960 --> 0:18:56.119 government needs to speak with one voice in dealing with 0:18:56.200 --> 0:19:00.280 foreign affairs, and that one voice should be of them, 0:19:00.400 --> 0:19:03.680 you know, the executive branch. So it's again the president 0:19:03.760 --> 0:19:08.520 has plenary, you know, virtually unlimited powers in dealing with 0:19:08.560 --> 0:19:12.080 other countries. On the other hand, that argument runs into 0:19:12.080 --> 0:19:15.520 a serious problem, and that serious problem is the US 0:19:15.600 --> 0:19:21.119 Constitution itself because Article Launce, Section eight was one state 0:19:21.320 --> 0:19:26.720 that Congress shall have the power to lay collect taxes. Duties, infosts, 0:19:26.760 --> 0:19:30.920 and excises and tariffs are really a form of attax. 0:19:31.480 --> 0:19:35.439 It's a form of attax. And therefore the power to 0:19:36.280 --> 0:19:40.680 lay and collect taxes fall within the power of comus, 0:19:41.200 --> 0:19:44.240 you know, not the present. And I think there's one 0:19:44.280 --> 0:19:47.240 other very important argument, and I don't think it came 0:19:47.359 --> 0:19:50.199 up in this recent argument before the US Court of 0:19:50.200 --> 0:19:52.919 Appeals for the Federal Circuit, and it's a very basic 0:19:53.000 --> 0:19:58.480 fundamental principle of our democracy and our founding fathers. We're 0:19:58.600 --> 0:20:02.800 very concerned about too much power residing in the hands 0:20:02.840 --> 0:20:06.000 of any one person or any one branch of government. 0:20:06.480 --> 0:20:09.640 And that's why we have a democracy based upon separation 0:20:09.720 --> 0:20:12.959 of powers. And here, if you follow the government, it's 0:20:13.000 --> 0:20:17.400 all even reasoning. Then the president has this unwomaned power. 0:20:17.520 --> 0:20:22.639 One person can decide to impose tariffs on any country 0:20:23.359 --> 0:20:27.480 or every country in the world, can decide what the 0:20:28.080 --> 0:20:31.320 percentage of the tariff should be, should be, ten percent, 0:20:31.680 --> 0:20:35.880 should be, twenty and twenty five percent against what countries 0:20:35.920 --> 0:20:38.600 and for what we And so it seems to me 0:20:38.920 --> 0:20:42.080 that the president's position really flies in the base of 0:20:42.240 --> 0:20:47.080 this very fundamental bedrock principle of separation of powers on 0:20:47.240 --> 0:20:48.679 which are democracy is based. 0:20:49.520 --> 0:20:53.800 So the panel of judges seem to sharply question the 0:20:53.800 --> 0:20:57.639 government's position. One judge said, tariffs seemed to have no 0:20:57.840 --> 0:21:01.240 friends in the text of the emergent see law. Do 0:21:01.320 --> 0:21:05.240 you think that a majority of the judges might rule 0:21:05.280 --> 0:21:06.560 against the tariffs? 0:21:07.359 --> 0:21:10.240 I think, based upon the questions and the tenor and 0:21:10.320 --> 0:21:12.919 some of the questions that were asked me the oral argument, 0:21:13.440 --> 0:21:16.960 I think the Federal opelate Court is very skeptical of 0:21:17.000 --> 0:21:22.240 the government's position that i provides authority from the President 0:21:22.280 --> 0:21:28.959 to impose terriffs. So I'm cautiously optimistic that the appelic 0:21:29.040 --> 0:21:34.320 Court will likely reject the government's argument and then find 0:21:34.359 --> 0:21:37.159 that i APE has been in a supply here. So 0:21:37.200 --> 0:21:40.679 then the credible next question, the credibal next step is 0:21:40.720 --> 0:21:43.280 going to be before the Supreme Court, because if the 0:21:43.280 --> 0:21:46.680 government loses, there's no question that they'll appeal the matter 0:21:47.040 --> 0:21:50.880 to the United States Supreme Court, and there the outcome 0:21:51.400 --> 0:21:53.040 is really up in the air. 0:21:53.359 --> 0:21:56.280 Because it's an on bank panel, the decision here can 0:21:56.320 --> 0:21:58.440 be appealed directly to the Supreme Court. 0:21:59.200 --> 0:22:02.240 Yeah, and there. What we've seen is that, you know, historically, 0:22:02.400 --> 0:22:04.719 just you know, the first six months of the Trump administration, 0:22:05.080 --> 0:22:07.760 the US Supreme Court has been very differential to the 0:22:07.800 --> 0:22:13.280 executive branch with respect to claims of executive authority or 0:22:13.359 --> 0:22:18.320 Trump adminspiration. The Supreme Court determined, first and foremost, the 0:22:18.359 --> 0:22:24.160 president is immutial from criminal prosecution excepting very very rare 0:22:24.200 --> 0:22:29.359 limited exceptions, and the President can on his own dismantled 0:22:29.400 --> 0:22:33.960 federalations without consulting with or attaining the approval of Commerce, 0:22:34.160 --> 0:22:37.280 and with whole bonds that have been appropriated by commers 0:22:37.480 --> 0:22:42.040 and fire Inspector General and fire other key government personnelities 0:22:42.080 --> 0:22:46.800 without any consultation or approval from Congress. And so the 0:22:46.840 --> 0:22:51.240 president might be a more favorable audience imported Supreme Court 0:22:51.880 --> 0:22:55.520 than he received before the US Court of Appeals for 0:22:55.560 --> 0:22:56.280 the Federal. 0:22:55.960 --> 0:23:01.600 Circuit is Supreme Court president. On the Challengers, they cited 0:23:01.640 --> 0:23:06.240 two of the Biden administration's biggest losses before the Supreme Court, 0:23:06.680 --> 0:23:12.320 in fights over restrictions on pandemic era evictions and canceling 0:23:12.440 --> 0:23:16.160 federal student loan debt to support their position that Trump 0:23:16.600 --> 0:23:20.200 now can't try to read more power into the economic 0:23:20.359 --> 0:23:23.919 emergency law than it offers on its face. 0:23:24.440 --> 0:23:27.200 Well, here's a difference. I think the difference here is 0:23:27.280 --> 0:23:30.879 that the Supreme Court again could focus on the fact 0:23:31.400 --> 0:23:37.200 that these tariffs involve foreign affairs and the president's ole 0:23:37.280 --> 0:23:42.960 oregon for the country on issues involving international affairs. The 0:23:43.040 --> 0:23:47.400 cases that you cited involved domestic statutes, you know, domestic law, 0:23:47.840 --> 0:23:52.480 not international foreign affairs. And so here the court might 0:23:52.560 --> 0:23:56.280 seize on that recognized and the president has those plenary 0:23:56.320 --> 0:23:59.560 powers in the field of foreign affairs, and again be 0:23:59.640 --> 0:24:03.200 more pathetic, you know, to the argument. At the same time, 0:24:03.640 --> 0:24:06.520 I mean, if the Court were to rule against the president, 0:24:06.760 --> 0:24:09.199 I mean, just think of the repercussions of that ruling 0:24:09.520 --> 0:24:13.080 with respect to the tariffs that the President has set, 0:24:13.359 --> 0:24:16.040 the tariffs that have gone into effect, the tariffs that 0:24:16.040 --> 0:24:18.080 are going to be going into effect in a few weeks. 0:24:18.119 --> 0:24:22.200 I mean, they would have just literally global ramification of 0:24:22.320 --> 0:24:24.919 the Supreme Court held that the President did not have 0:24:25.000 --> 0:24:29.840 the authority to impose these tariffs foreign countries across across 0:24:29.840 --> 0:24:30.320 the globe. 0:24:30.640 --> 0:24:34.480 Could the US then be forced to refund duties that 0:24:34.640 --> 0:24:38.800 have already been collected, Would the ruling be retroactive? 0:24:38.920 --> 0:24:42.840 Would really just be you know, perspective, and so the 0:24:42.920 --> 0:24:45.520 scope of the ruling we would have to see, you know, 0:24:45.560 --> 0:24:47.920 what the application scope of the ruling would be. But 0:24:48.080 --> 0:24:50.240 that certainly could be one of the one of the 0:24:50.280 --> 0:24:53.439 implications if it rules against against the president. And so 0:24:53.600 --> 0:24:56.840 maybe again the Supreme Court just doesn't want to take 0:24:56.880 --> 0:24:59.920 that on. They don't want to rule in a way 0:25:00.240 --> 0:25:04.320 it's going to create these kinds of political and economic 0:25:04.560 --> 0:25:06.800 and you know, sea waves across the globe. 0:25:07.280 --> 0:25:10.520 Does Trump have other tools to impose tariffs? 0:25:10.880 --> 0:25:12.679 The tool would be the I think the appropriately too, 0:25:12.680 --> 0:25:14.639 it would be just simply to build to Congress. And 0:25:14.720 --> 0:25:18.000