Bloomberg Businessweek — EU Warns That Trump’s New Tariff Policy Breaks Trade Agreement

Date: February 23, 2026
Hosts: Carol Massar, Brian Sullivan, Emily Griffeo
Key Guests: Katherine Judge (Columbia Law), Greg Daco (EY Parthenon), Madison Mueller (Bloomberg), Ryan Stella (Bloomberg), Lauren Rosenthal (Bloomberg)

Episode Overview

This episode explores the legal, economic, and global ramifications of the U.S. Supreme Court’s major decision rejecting President Trump’s tariff policy, the EU’s pushback, and the resulting market volatility. The show also discusses R&D setbacks in the weight loss pharma sector, a nervous stock market reacting to AI risks, and record-setting winter weather in New York.

Key Segments & Insights

1. Market Jitters: Tariffs, AI, and the Fear Gauge

[02:59-03:37]

• Markets are volatile: stocks down, bonds up, Bitcoin dipping, and gold rallying.
• Renewed fears about Trump’s tariff policy and the impact of AI on profits have driven the VIX “fear gauge” above 20.
• "Investors are nervous." — Brian Sullivan [03:37]

2. The Supreme Court’s Tariff Decision & Its Fallout

Guest: Katherine Judge, Professor of Law, Columbia
[03:37-14:55]

What Happened?

• The Supreme Court (6-3) ruled against President Trump’s new tariff initiative, a major blow as it was central to his economic agenda.
• The ruling reasserts that tariffs are a form of taxation, which “the Constitution clearly vests in Congress.” — Katherine Judge [05:30]
• The court’s rejection introduces more uncertainty than clarity about presidential authority in trade.

Legal Nuance and Presidential Power

• The decision was split, with differing legal rationales and a heated dissent. Some justices found the statute did not authorize tariffs; others focused on constitutional principles.
• "It really was an aggressive reading ... to try to use the International Economic Emergencies Authority ... It doesn't even mention tariffs anywhere in the act." — Katherine Judge [05:30]
• Discussion about the balance of power between Congress and the President: "Congress can't hand that type of authority over to the president." — Katherine Judge [06:18]

Wider Implications

• The ruling limits, but does not eliminate, presidential powers under emergency authorities.
• The legal landscape for the use of emergencies in economic and other domains “remains open.” — Katherine Judge [10:06]
• Supreme Court left open whether $160 billion in tariff revenue should be refunded: "The dissent says, 'Look, this is going to be a big mess.'" — Katherine Judge [12:27]

Next Legal & Political Moves

• The refund issue will be handled by lower federal claims courts.
• Ongoing legal and market uncertainty will "reduce the President’s dealmaking capacity in really meaningful ways." — Katherine Judge [14:18]
• Noted: Immediate pushback from the European Union.

3. Economic Impact: Growth, Trade, and Tariff Turbulence

Guest: Greg Daco, Chief Economist, EY Parthenon
[17:44-25:18]

Post-Decision Landscape

• Supreme Court ruling removed some existing tariffs but new ones were quickly proposed, muting hoped-for relief.
• Average tariff rates:
  • Pre-ruling: 16.9%
  • Post-ruling: ~9%
  • After new tariffs: ~13.5%
  • GDP drag reduced from 1.2% to 0.6%, but new tariffs bring it back to ~1%.
    — Greg Daco [19:45]

Uncertainties & Growth

• "From a business standpoint, this is a highly uncertain environment… very difficult to plan." — Greg Daco [18:41]
• Policy instability means businesses may delay investments and hiring; economic headwinds persist.

Consumer, Labor, & Stagflation

• Businesses may not pass on reduced input costs to consumers; price relief may be limited.
• Real disposable income growth is weak, "below 1%," limiting consumer spending. — Greg Daco [22:36]
• "Not as worried about stagflation” (growth is 2.5%, inflation slightly above 2%). Real risk: “a lot of the growth is not felt by most consumers.” — Greg Daco [24:00]

4. Pharma Sector: Novo Nordisk, Eli Lilly, and GLP-1 Market Drama

Guest: Madison Mueller, Health Reporter
[28:14-36:30]

Novo Nordisk’s Struggles & Market Dynamics

• Novo’s new drug Cagrosema came up short in head-to-head trials with Lilly’s Zepbound, disappointing investors.
• Overreliance on Semaglutide (Ozempic/Wegovy) led to R&D stagnation.
• "The expectations for this weight loss market have gotten so high… if it's not better, it has to be really different." — Madison Mueller [31:25]

Market Segmentation & Patient Needs

• “The market is segmenting… with more, better-targeted options coming.” — Madison Mueller [32:19]

Eli Lilly’s Moves

• Launched a new pen for Zepbound, offering a full month’s treatment in one device at a competitive out-of-pocket cost.
• Shares up 4% on the day.

Hims & Hers Update

• Ongoing lawsuit with Novo Nordisk over copycat weight-loss drugs.
• Regulatory risk has increased, with the FDA signaling tougher enforcement.
• "They've always skirted the gray regulatory area, but this is a little bit different… this is the most the FDA has signaled enforcement." — Madison Mueller [35:42]

5. AI-Fueled Market Selloff & Software Sector Outlook

Guest: Ryan Stella, Equities Reporter
[36:53-43:47]

The “Weird Economy” & Investor Fear

• A bearish research report imagines a destabilized 2028 economy with 10% unemployment due to AI job displacement.
• "Investors haven't really needed any excuse to sell stocks… people are just selling things en masse." — Ryan Stella [38:28]

Sector-Specific Angst

• Mass selling in tech/software, cybersecurity, and payment stocks stems from AI disruption fears.
• Big software company earnings could set new tone: “Are they facing existential competition from these AI labs that are just very hard to compete with?” — Ryan Stella [39:42]
• Uncertainty about how quickly, and which, companies will be disrupted: “There are a huge, huge wide range of potential outcomes.” — Ryan Stella [41:01]

Nvidia & Future Outlook

• Close watch on Nvidia earnings: expected near-term strength due to hyperscaler AI spending, but long-term unknowns fixed in focus.
• "We haven't seen estimates move much for 2026/27, but difficulty modeling further out is making stocks hard to value." — Ryan Stella [41:01]

6. Weather Watch: Northeast Blizzard

Guest: Lauren Rosenthal, Weather Reporter
[46:54-51:24]

Blizzard Details

• NYC buried under ~20 inches of snow (top 10 snowiest days on record).
• Up to 30 inches reported in parts of Long Island.
• "This is one of the top 10 24-hour snowfalls in Central Park on record. Those records go back to the 1800s." — Lauren Rosenthal [50:10]

Impact

• Nearly 600,000 businesses/homes lost power, 10,000+ flight cancellations.
• Some subways and buses running; all Amtrak between Boston and NYC canceled.
• More snow possible later in the week and another nor’easter is not ruled out; “We may not be out of the woods until April.”

Notable Quotes

• Katherine Judge (Columbia Law):
  "The court recognized that tariffs are a variation of the power to tax, and the power to tax is one that the Constitution clearly vests in Congress." [05:30]
• Greg Daco (EY Parthenon):
  “From a business standpoint, this is a highly uncertain environment... very difficult to plan.” [18:41]
• Madison Mueller (Health):
  "If it's not better, it has to be really different." [31:25]
  "They've always skirted the gray regulatory area, but this is different... the FDA has signaled enforcement." [35:42]
• Ryan Stella (Equities):
  "There are a huge, huge wide range of potential outcomes. So... people are just selling." [41:01]
• Lauren Rosenthal (Weather):
  "This is one of the top 10 24-hour snowfalls observed in Central Park." [50:10]

Timestamps for Major Segments

• [02:59] Markets & Tariff Anxiety Begin
• [03:37] Katherine Judge on Supreme Court Tariff Ruling
• [14:55] Segment with Greg Daco (Economist)
• [28:14] Madison Mueller on Pharma & GLP-1 News
• [36:53] Ryan Stella on AI & Market Selloff
• [46:54] Lauren Rosenthal on NYC Blizzard

Summary Takeaways

• Tariff Policy Upended: President Trump’s new tariffs blocked by the Supreme Court, reasserting Congressional control, foreshadowing fresh legal and political fights, and drawing EU ire.
• Economic Uncertainty: Business leaders face a murky outlook as new tariffs replace old ones and consumer income growth stalls.
• Market on Edge: Fears about AI-induced disruption, combined with shifting trade policy, are fueling a risk-off environment for tech and software stocks.
• Healthcare Shakeup: Novo Nordisk stumbles in R&D versus Eli Lilly, as high investor expectations reshape the pharma weight loss market.
• Extreme Weather Hits NYC: Historic snowfall triggers major disruptions, with more possible, underlining resilience and risk in 2026.