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- [00:00]
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- [01:02]
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- [01:30]
Andrew Egger
Hi everybody. Doing a emergency livestream based on a really remarkable piece of economic news that just dropped this morning. I am Andrew Egger with the Bulwark. This is Katherine Rampel, our economics editor, author of our receipts newsletter Big News. I mean, this is the Supreme Court decision that we have been sort of logging on, getting ready to maybe do this video every time. The Supreme Court has been dropping news for the past or dropping opinions for the past few months because the Supreme Court has finally decided to weigh in on Donald Trump's Liberation Day tariffs, his emergency authority that he has claimed to basically set tariff levels at wherever he wants them to all over the world. The Supreme Court this morning struck them down. They're not gonna be constitutional anymore, at least under the authorities that Trump has tried to use so far. Which means that the tariffs that were collected all through the last year, not every tariff, but there are some that, that he authorized through other authorities. But the bulk of them, the kind of massive. Every country gets a slightly different level, but there are some on everybody sorts of tariffs that we have seen since last April, which have been one of the biggest economic stories of the first year of the Trump White House. Those are gone and they may even need to refund some of that money. There's so much to talk about with all of this. Catherine, let me just start with just your first blush reaction to this news. Like what can just zoom us out here, what's going on and what's going to happen.
- [03:03]
Katherine Rampell
Sure. So it was expected to be clear that the Supreme Court was going to strike down these tariffs. The only question is, you know, how. The only question was, I should say, how big of a rebuke it was to Donald Trump and what tools they left for him to use to try to reconstitute those tariffs. And in this particular decision, we did find that the justices basically said they ruled on, on two issues. They made the decision based on two arguments. One was the major questions doctrine, basically saying that the executive was claiming an extraordinary power that was not, he was not entitled to, per the Constitution, that is the power of the purse, the power to set and lay taxes. They said he cannot do that. And then the narrower issue was, does this law that he was using to justify these tariffs to basically to create, to proclaim that there were emergencies that required the tariffs, does that specifically allow to do that? And in both cases, they said no. The majority said no. They punted, however, on what happens to all of the tariffs that have already been collected. And there is a lot of money on the line. That's about $175 billion, I think, per the Penn Wharton budget model. There's some, you know, some uncertainty about that exact number. But it's a lot of money. And so it's a little bit unclear what happens going forward to all of that money and how quickly or easily or if at all it will be refunded back to companies. And there are a lot of companies that understandably are really hoping to get that money back asap. And they have been putting off decisions until they got it back. But yeah, I mean, I think the, the top line reaction that I have is that this was a rebuke to Trump. It was really more about his constitutional authorities than the narrow question of tariffs per se. And what it means for the economy going forward is a little bit hard to know, because we don't know what the remedies will look like quite yet.
- [05:09]
Andrew Egger
Yeah, yeah. I mean, to me, there's basically two elements to all of this. One is that of course, just as at a sort of very baseline Econ 101 level, tariffs are disruptive. Tariffs create economic inefficiencies in a vacuum. Tariffs tend to make things more expensive, make it harder for the economy to grow just in all the normal ways that you would expect. At the same time, one of the things that we have been running into a lot recently is not just the raw inefficiency of having tariffs in place, but the inefficiencies that are created by the chaos of having tariffs being slapped on and pulled off and slapped on and pulled off. That had slowed down a certain amount by the second half of last year. I mean, that was kind of the whole story of spring and summer in terms of global economic policy, was that the White House was just going nuts with the rates and the changes and the chaos. In the immediate term, even if this money is not refunded, it's just sort of the latest instance of that. Right. I mean, all of these tariffs sort of winking out of existence overnight, in theory will lead to, or could lead to yet another sort of sea change in what is most efficient for these different firms to be doing more money spent on setting up and unsnarling supply lines. So probably in the medium term, again, if these tariffs stay off, good for the economy. But at least here, perhaps another period of chaos. But the other thing that I wanted to ask about is. That's the, that's the whole question, right? Is do these stay up? Because the White House has promised that even if these particular authorities were overturned, they might try to get basically the same tariff regime in place in another way. Can you just talk a little bit about what that might look like and whether that seems likely to. To. To work?
- [06:57]
Katherine Rampell
Yeah, this administration has been telegraphing exactly that. Like I said, there has been some expectation for a while that the Supreme Court was probably not going to rule in Trump's favor on this particular issue, which is the IEBA tariffs, the national emergency tariffs, which is most of the tariffs he's put in place. But there are a lot of other powers related to tariffs, a lot of other authorities within the law that the administration can use, and they have been saying for months, basically, yeah, if the Supreme Court strikes them down, we're going to do a whole bunch of other things instead and try to reconstitute these tariffs. Now A few points about that. One is that I kind of wonder if effectively by saying that out loud, and Scott Besant, the Treasury secretary, among others, did say that they effectively gave the Supreme Court permission to rule against them. Because it's like, are the stakes for the tariff question about this, not the constitutional question about this, Are they really so high? If, in fact the administration itself has said, you know what, we can do this anyway. However, it will be a bigger pain in the ass for the administration to put these other tariffs in place because they require like, notice and comment and public hearings and, and all sorts of other procedural stuff that I'm sure is very annoying for this administration because Trump just wants to, like, use his itchy Twitter finger and put out as many tariffs as he can, like, because he's mad that some Canadian politician happens to have put out an ad about using Ronald Reagan's words or whatever and declare that a national emergency, real thing that happened. But Trump will not be able to do that. Instead, he has a few other powers at his disposal. I collected some of them. Let me see if I can rattle them off. And you'll hear in these descriptions the fact that there are some greater constraints besides the fact that there's more process involved. So, like Section 122 allows the President to impose 15% tariffs on imports for 150 days while building a case for tariffs under Section 301. Section 301 is something about unfair practices. So these were the original tariffs that were put in place on China in 2019. There are safeguard tariffs under section 201 that are about if there's a sudden increase in imports that threaten to injure, threaten or injure an industry. He did that with the washing machine tariffs, I believe, in his first term in solar panels. Then there's another one, Section 232, about national security, which sounds, you know, conceptually pretty similar to national emergency, but it's a completely different authority. And he's used that for what they call the sectoral tariffs on steel, aluminum, auto parts, ongoing investigations into a bunch of other things. So all of this sounds like super eyeglazingly boring and technical, but the upshot is that they are going to try to use these other authorities to try to put more taxes in place. But they are somewhat more constrained both in terms of the time frame and, you know, what the limitations are in terms of, like, what products or countries they can put them on. And all of this also matters not just for the companies, which, as you rightly point out, have been Scrambling and unscrambling and canceling and un. Canceling supply chains and orders and everything else, but also for our relationships with other countries. Because, remember, part of the reason that Trump was putting these tariffs in place to begin with was that he wanted to, like, make these, these demands of our trading partners to do something about drugs, something about products. Like there were all sorts of different rationales.
- [10:48]
Andrew Egger
Something about anything. I mean, like, this is. Something about anything is, you know, if we don't like what you're doing, we're going to slap a tariff on you. Yeah, go ahead.
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Katherine Rampell
Sorry. Right, exactly. And now he can't do that as easily because, again, he can't just like pull the trigger on tariffs. There have to be a lot of meetings and hearings and evidence submitted and whatnot. So one question is, what happens to all of the deals and that have been struck to date using these tariffs as a cudgel? The tariffs that have now been ruled unconstitutional?
- [11:19]
Andrew Egger
Yeah. And this has been a case that Trump himself has been pretty explicitly making in his many, many truth social posts directed toward the Supreme Court, where he has basically said, look, we really like being able to use these as a cudgel to get other countries to do what we want. You will be basically defanging, taking like our best weapon out of our hands for doing geopolitics and cudgeling these allies and enemies alike into policy that we think is more favorable if you overrule these tariffs. I think what you were saying a bit ago about just sort of that patchwork of authorities that still exist, I think people should keep that in mind. I mean, it is not like the whole Trump regime tariffs, even the ones that already exist. I mean, some of these were already authorized under different authorities. Like I said before at the end, the ieppa ieepa, I should say. But I think what it really demonstrates, what it really shows, like, yes, we could have them try to sort of backfill a lot of this through these different tortuous processes and things. What it really underscores to me is just how remarkably sweeping and sort of all encompassingly powerful the tariff authority that they were asserting. The thing that the Supreme Court just struck down was, I mean, it really truly was, I, the president, have the authority to put any tariff on any product from anywhere, at any level, for any reason. And he would be explicit about this. Right? I mean, like, a lot of his laugh lines at rallies were about the prime minister of some country getting him on the phone and being like, hey, can you bring down some of these tariffs? They aren't really all that important to you, but they're kind of crushing us. And then the laugh line being and I didn't really like the sound of that, so I raised the tariffs more.
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- [13:59]
Kalshi Advertiser
the world is always changing. Now you can track what's likely to happen and trade on the outcome with Kalshi. From politics and economics to breaking financial news, Kalshi markets show real time probabilities of what will unfold and you can make money on what you think will happen. The State of the Union is Tuesday. Will new policies be announced? What will Trump say? Who shows up? Trade outcomes live on Kalshi available in all 50 states for a limited time. Download the Kalshi app and use code iheart to get $10 when you trade $10.10k a l s H I Kalshi trade on anything.
- [14:29]
Andrew Egger
That kind of thing.
- [14:30]
Katherine Rampell
Well, until. Until delegations from those other countries come bearing literal gold bars as the Swiss delegation. Did you know they brought gold bars and a Rolex desk clock and magically Trump decided to roll back the tariffs on Switzerland that very day. So yeah, this, you bring up a really interesting point here, which is that it's about how much power is concentrated in one single man. Right? It's not only about does the legislative branch or the executive branch really have the authority to lay taxes, which is what the Constitution says. It's a legislative branch. Right. They can sort of delegate some of that power to the executive branch under certain circumstances if they meet certain milestones or Whatever. But the Constitution says it's supposed to be the legislative branch. But even if you thought like it was supposed to be the executive branch, that they can make some different argument about tariffs versus other kinds of taxes or whatever, this is not the executive branch writ large. This is the whims of one particular guy. And whether he feels good or bad about you that day, whether you have sufficiently lined his pockets, or in this case, I guess that the decor on his desk in the Oval Office, that is what had been deciding what these tariffs rate, what these tariff rates were for thousands and thousands of companies. And now the Supreme Court is saying, no, sorry, we've imbued you with a lot of powers to date, but maybe not this one particular power.
- [16:08]
Andrew Egger
Yeah, yeah. So this is all we should emphasize. Extremely raw. We got this decision basically half an hour ago. We immediately started reading it, started figuring out what the ramifications are as we are live right now talking about all of this. Everybody else is chewing through this stuff, too. We're getting first reactions from a number of different groups. So let me just read a quick thing that one of our people just dropped in slack about some of those businesses that are basically reading through this. And like you said a minute ago, Catherine, being like, wait a minute, are we getting our money back or are we not getting our money back? You just said that all of these tariffs under which the President collected more than $100 billion from the U.S. economy, from U.S. businesses, he shouldn't have been allowed to do that. All that money's still sitting in the Treasury. Is this gonna be reimbursed? So let me just read. This is from the Washington Post, a quote from a group of small businesses. I don't have all the information here, but a group of small businesses made a public appeal for the federal government to swiftly refund the money they had paid in connection with the President's illegal tariffs. And here's the quote, okay. The group is called We Pay the Tariffs, a coalition of more than 800 small businesses. Here's the quote. The administration's only responsible course of action now is to establish a fast, efficient and automatic refund process that returns tariff money to the businesses that paid it. Small businesses cannot afford to wait months or years while bureaucratic delays play out. Nor can they afford expedition, expensive litigation just to recover money that was unlawfully collected from them in the first place. These businesses need their money back now, said Dan Anthony, executive director of We Pay the Tariffs. And this kind of gets to what you were talking about a bit ago. The Fact that this decision was widely expected to go this way. At some point, the Supreme Court was going to strike down these tariffs. I mean, for the particular businesses that happen to have been hit very hard, say you rely on supply chains from one of these countries that you just saw a 40% tariff go up on overnight. They've known this, too. You know, they've been looking forward to, okay, if we can just make it to the point when, you know, we'll get this boot off our necks in terms of our supply chains and whatever, maybe then we can, we can survive in an environment where if this were just the way it was going to be from now on, we wouldn't. We would. We would just close up shop and fold. They are. Now,
- [18:27]
Katherine Rampell
I was going to say, in addition to the fact that it's been hard on these businesses to try to, you know, get their cash flow to work out, because they have been gritting their teeth and paying the tariffs in the hopes that they would get the money back, they've also been holding off on price increases. A lot of them. Like, there's been this big puzzle over the past year. Why haven't we seen prices go up a lot more? I mean, they, you know, inflation has been higher than it had been predicted before Liberation Day and all of that, but we still haven't seen inflation quite as high as many of us feared, let's say, a year ago. And the reason why, if you talk with business owners, is that they have been trying to temporarily absorb the cost of those tariffs in the hopes that the Supreme Court was going to give the money back to them. And that way they wouldn't risk pissing off their customers essentially by raising prices any more than they absolutely had to. Like, there's one, one executive that I talk with fairly regularly. It's the CEO of Balsam Hill, which is a big Christmas tree company, artificial Christmas tree company, Holiday decor company. And he was basically saying that, you know, I think they raised the price of their Christmas trees last year by about like, 10%, but that was nowhere near the hit that they had taken on tariffs, which I think was. I'm trying to remember what the. The, the tariff rate was, but it was like 30 or 40%. It was something absurdly high. And they were just holding on and, like, pushing off, paying bills and pushing off raising prices because they were counting on the fact that the Supreme Court was going to give the money back to them, and they just needed to wait a little bit longer. So now that the Supreme Court has effectively punted on this, they've, they've, as I understand it from talking briefly with Scott Lincecombe, who's like my go to person, he's at Cato on all trade issues. He basically said that they've sent the issue back to the Court of International Trade, which is a punt. And so it does leave all of this uncertainty for companies that have been holding off, you know, just hoping that they're going to get this money back and that they won't have to raise prices for customers and they won't go under. They apparently have to wait a little bit longer, even though apparently, you know, in the abstract the law is on their side. The Supreme Court has determined. But that doesn't mean that they get the money back in their pockets. And the real question is like, how much longer can they hold off? I don't know how long this process takes with the Court of International Settlements, for example, but it's going to be really hard on a lot of small and medium sized businesses around the country.
- [21:06]
Andrew Egger
Yeah, yeah. And just to be kind of clear, like, there's two different things that we're talking about here. So, like going forward based on this decision, presumably immediately, I mean, I don't exactly know how logistically it will work, but presumably immediately these places will not be having to continue to pay these tariffs until such time as Trump finds some new authority to put them on. But this, what you're talking about is specifically the question of the duties already collected over the whole, basically second half of last year, last two thirds of last year.
- [21:32]
Katherine Rampell
Right. And as I said, that's like, that's like $175 billion. So it's a lot of money. And the other piece of all of this that we haven't talked about is all of the things that that money was supposed to have been earmarked to cover. Right. So this, it's a lot of money. And Donald Trump had said, on the assumption that he wasn't going to have to give the money back, that he was going to use it to pay for lots of other things. He was going to use it to pay for stimulus checks. You know, there was supposed to be like a $2,000 tariff dividend that was going to go to everyone. That didn't happen. He was going to use it to pay down the national debt. He was going to use it to pay off farmers who have, of course been hurt by his trade wars. He was going to use it to pay for, you know, building up our military or whatever. There are a lot of these things that the Money was like quadruply earmarked for that. It wasn't sufficient to pay for even when we had it. And now it looks like they're going to have to give it back in some fashion. On what timeframe? I don't know. But that does call into question all of these other objectives that Trump said he was boosting through these trade wars.
- [22:46]
Andrew Egger
Yeah, yeah. Let's turn a little bit now and I'll caveat right off the top by saying that I'm a political reporter, you're an economic reporter. Neither of us are like SCOTUS whisperers where this is not exactly our.
- [23:00]
Katherine Rampell
I'm also, I have no legal training.
- [23:02]
Andrew Egger
Yeah. But we should talk a little bit about the, just the, some of the specifics of this ruling because not only are they striking down this economic policy policy regime as it has has existed for the past eight months or however long, it's also a pretty striking set of statements in here about just sort of like the, the, this Court's approach to this administration when it comes to like legislative versus executive stuff. So like we said, I think we said right at the top is a 6, 3 ruling. You basically got Gorsuch and the Chief justice and Amy Coney Barrett in, in, in more or less agreement with the three liberals on the court. And you got Alito and Kavanaugh and Thomas all dissenting. It's interesting, the fight, I mean it really is sort of like an intra originalist fight here where you basically have who was it? I guess Kavanaugh. It was Kavanaugh's dissent basically saying, look, you know, Congress has passed laws saying that you ought to be able to, the executive branch needs to be able to regulate imports. And that's what this is. And so I think it's allowed. And then on the other side in the majority, you basically got this opinion from Roberts, Chief Justice Roberts, who wrote it, and most of the, the sort of broader picture stuff, there's a lot of stuff in there specifically about the emergency economic powers under the ieepa. But the broader question is just about this major questions doctrine. The idea at the Supreme Court that if the executive branch is asserting like this broad statute, there's broad authority to make these major changes with these huge implications. They need to have been explicitly authorized by Congress to do that. That Congress cannot really like give away through some like, oh, and the executive branch is allowed to make decisions in this area without really explicitly saying no. They're allowed to set this exact thing in these what they call major questions. So let me just Read this bit here from the Chief Justice's opinion. The economic and political significance of the authority the President has asserted likewise provides a reason to hesitate before concluding that Congress meant to confer such authority. The President's assertion here of broad statutory power over the national economy is extravagant by any measure and as the government admits, indeed boasts, the economic and political consequences of the IEEPA tariffs are astonishing. The government points to projections that the tariffs will reduce the national deficit by 4 trillion, that international agreements reached in reliance on the tariffs could be worth 15 trillion. In the President's view, whether we are a rich nation or a poor one. I love this. He tweets this all the time. In the President's view, whether we are a rich nation or a poor one hangs in the balance. As in those other cases, a reasonable interpreter would not expect Congress to pawn such a big time policy call off to another branch, which. Yeah, that's true. I mean, like these. Again, we keep coming back to this. Just astonishing how broad the tariff authority asserted under this one act was by the President here. And in some respect we should not be all that surprised that this Supreme Court reined it in. But I think that people have been sort of like conditioned over the first year of Trump to feel like this Supreme Court is a little bit of a pushover when it comes to various things about him because they have had a certain amount of deference to really bad use of executive power that they think is still legitimate use of executive power. But this is sort of a different thing. I mean, this is like a real attempted usurpation of authorities that should and do belong to Congress by the President that have wild, wild political applications. And so I think it should be reassuring not just for people who like, don't like tariffs or think that they're bad economically or that their business is involved, but this is like a real brushback pitch on a major, major Trump policy issue that shows that when it comes to these specific questions, these specific questions of like torturing these legislative authorities and trying to drive a bus through the eye of a needle in these ways, the court actually does have a little bit more of a backbone here than maybe some people would have given it credit for.
- [27:12]
Katherine Rampell
Yeah, I mean, I was listening to your word choice there. You said that people have been conditioned or something to think that the Supreme Court would do Trump's bidding. I would say the Supreme Court has conditioned the American people to think that they will do Trump's bidding because they have given him so much deference on so many other issues. And again, I'm not a lawyer, so I'm not sure I could explain or, you know, I don't quite understand why on this issue they have found their backbone and on lots of other issues about accountability and about reigning in the powers of the President, they have not. You know, a cynic might say it's something to do with the fact that there are major economic consequences. Certainly that's how I view, that's the lens through which I view how they regard the executive's ability to fire, for example, Fed members, but not, you know, not fire Fed members potentially, but fire lots of other independent agency members. Some of that might have to do with what the effect is on markets. But here I guess it's just, you know, again, not a lawyer. It seems like it is a much more clear cut case of the Constitution says this is Congress's purview. They are the ones who lay taxes, they are the ones who regulate international trade and therefore the President cannot just unilaterally usurp those powers. You know, but again, there was enough of a gray area that I guess this was not considered 100% chance that they would rule this way. And that is in part due to some of the other decisions they had made in the past year. How do you see the difference between why they seem to have caved, the justices seem to have caved in other cases versus this one?
- [29:06]
Andrew Egger
Well, let me show my ass a little bit here. Let me speculate, as like I said, a political reporter and not really a court whisperer. I do think that there is a distinction that you can make between this sort of case which is truly, I mean, like this is the kind of thing that is going to get all sort of like originalists in good standing, their dander up a little bit of the executive branch sort of tormenting the text of a law in order to usurp a power that just fundamentally belongs to Congress. And I think that when that one big difference between this and say any of the different cases that have involved independent agencies which, you know, under different laws that have been passed have been set up and there have been these attempts to kind of make these quasi part of the executive branch, but also not really. I mean, a lot of the justices on the Supreme Court have this pretty fundamental problem with that whole structure and they think that this whole business of these half independent parts of the executive branch are a misfire on Congress's part that isn't really in keeping with the Constitution. And so that's in the back of their mind. They're giving him more deference in these again, intra executive branch squabbles. But I think one way that you can square this is basically you can be a conservative Supreme Court justice and believe in a muscular executive branch and even believe in like the unitary executive theory, where all the powers that are rightfully belong to the executive branch are really vested in the person of the president and he should be able to make those decisions internal to the executive branch while also believing, as for instance, the chief justice and Neil Gorsuch and Amy Coney Barrett appear to that that doesn't mean that the powers that properly belong to the legislative branch can just be the president can help himself to those. That's just one way, you know, that occurs to me to square that. But again, I mean, like I said, I have not been following all of these cases extremely closely either. We've been waiting on this one. We're getting this one. Let me, let me jump really quickly to a couple of of your do you have anything to add on that,
- [30:57]
Katherine Rampell
Catherine before I'm genuinely curious. I've been asking like every law professor I meet this question and I've heard different variations of what you said and different variations of what I said about the more cynical interpretation. But, you know, I'm not a court whisperer, again, not a lawyer, so I don't know.
- [31:16]
Andrew Egger
You haven't lost a lot of money betting against the cynical interpretation of really anything over the last few years. I try to war against it in my own analysis when I can, but, you know, it's not unreasonable, it's not insane. Let me turn to a couple of listener questions that I think are helpful. We can just noodle on them a little bit. DANIELLA Maria Marks asks I'm a little scared. Can Congress retroactively approve the tariffs? Yeah, they could. They probably won't. I mean, I mean, it depends what you mean by retroactively approved. In theory, Congress could pass a law that would basically say we wash our hands of this and we think that the president sets really good tariff levels and it's basically authorizing what the president was saying was the point of the ieepa that would not run afoul of the major questions doctrine. Because the Court's reasoning here was basically if Congress wanted to do this, they would have needed to be a lot more explicit about it. So Congress could be a lot more explicit about it. In theory. You could still then get like a constitutional challenge to that law, basically saying, you know, the legislature shouldn't be able to hand over this power route and Branch because it really does properly belong to the legislature. Who knows how they would rule on that. But it's possible. I don't know what the answer would be to, for instance, whether you'd be able to do that through budget reconciliation. So, like whether it would be, you
- [32:32]
Katherine Rampell
know, actually, actually, I was going to say that Bernie Moreno had tweeted a little while ago saying that basically calling for a reconciliation bill, reconciliation vote, so just a 50 volt threshold to. To put these tariffs in place. He says SCOTUS is outrageous. Ruling handcuffs our fight against unfair trade that has devastated American workers for decades. These tariffs protected jobs, revive manufacturing and forced cheaters like China to pay up. Now globalists win. Factories, factories, investments may reverse and American something or other. I got cut off anyway. But so he is calling for Congress to stand up and affirm that these tariffs are good and necessary, which Congress, as you point out, could very well do and would be on much firmer constitutional ground doing. Do I think that they are going to do that? No. And in fact, there was a congressional rebuke of Trump relatively recently over his tariffs on Canada, which suggests that there is a little bit of appetite, actually, for standing up to Trump against these tariffs. But I'm sure that lawmakers are very relieved to have had SCOTUS essentially doing their dirty work for them.
- [33:44]
Andrew Egger
Yes, it is. It is such a weird political moment for exactly the reason that you describe, where like in theory, Donald Trump could quietly take a win here. I mean, it's going to be good for his economy in the long run that these tariffs are gone and a lot of lawmakers feel the same way. And yet there's this immediate term like MAGA benefit, if you are a Republican politician, to be one of the first people out there sort of that you can't believe how bad it is that the great president's wings have been clipped in this way. So, yeah, we will see. I mean, it's possible. Bernie Moran, I mean, he's an Ohio senator. The sort of like downfall of like rough input manufacturing, you know, steel and aluminum manufacturing hit. Hit the Great Lakes states pretty hard. So like, in theory, maybe Ohio did benefit more than other states lost from some of these tariffs. I don't know.
- [34:36]
Katherine Rampell
Well, in Moreno, Moreno in general, I think has been. Will. Has been trying to curry more favor with this administration and putting his name to a lot of policies that Trump wants in place that other lawmakers in his party do in place. So there's this. There's the institutional investor ban that Bernie Moreno has said he will be the sponsor of a legislative amendment on that, which we can go into another time. But. So I think it's not only about manufacturing for him. I think it's also about, like, wanting to see this, the mantle of the MAGA cause and, and say like he's part of the team.
- [35:15]
Andrew Egger
Yeah. Let me, let me go to one other question here. I don't know how to pronounce this person's name. Dismay fi. Maybe can the consumer sue the government for their money back? Some. A lot of lawsuits are already happen, so. And it's not consumer lawsuits so much as it's business lawsuits. We mentioned that we paid the tariffs group before, but there's a bunch of these. I mean, like a lot of people have had to pay a lot of money to the government and a lot of them have been in court trying to get it back. A big part of the stuff that we're not talking about because it's too in the weeds with this particular decision. And the way it got to the Supreme Court was consolidation of a few of those cases, different places in which it's going to be heard. But what we were talking about a little bit before is as far as from the business standpoint, that remains to be seen that those, those cases are ongoing and this ruling does not like, preclude any of those about getting the money back as from the consumer side of things. I might be wrong about this, Catherine, but my understanding is the answer is really no. I mean, it's.
- [36:10]
Katherine Rampell
Yeah, that's my understanding.
- [36:11]
Andrew Egger
Consumers do not pay direct tariffs. I mean, the way that consumers have been paying for these is that businesses pay for them and then businesses have had to raise their prices in order to stay afloat. But consumers would not really have grounds to sue in any kind of direct or even kind of collective way. So the question is just whether businesses will get the money back and thus be in a somewhat better place to not continue to pass costs along. So it's still a good ruling from the point of view of consumers because of all these inflation concerns that we have been talking about all along, but not in that direct way. You're not going to get a SCOTUS tariff rebate check. Alas.
- [36:52]
Katherine Rampell
Yeah, that would be nice. Yes. That is my understanding as well that basically the entities that have the power to sue and that have sued are like a, you know, a thousand plus companies. You know, some of them people have heard of like Costco and a bunch of fashion companies. I have a list somewhere of some of them. Yeah, let's see. J Crew, Elf Cosmetics, Reebok, Puma, Costco, Which makes a bunch of the fancy luxury sunglasses and other glasses. They've all paid billions in tariffs and they're suing to get it back. But that's because they paid the tariffs, right? Or some other importer paid the tariffs. And then those costs get passed along to consumers. And in fact, most of the costs have been passed along to consumers in some fashion or another. But it shows up, as you point out, in the form of higher prices. Not actually a tax that is remitted directly to the government. The tax was. Was paid somewhere further upstream in the supply chain. So consumers will not get their money back on, you know, the designer purse that they purchased or whatever from France. But there is a question of how companies, assuming that they get their tariff money back, how they then adjust their price schedules. Like I said, a lot of them, I think, have been holding off on raising prices as much as they otherwise would, given the costs that they've had to absorb. They've been passing along the price increases to some extent, but not 100% of the cost because they've been hoping to get that money back. But assuming that they do get that money back, that's going to be a nice little, you know, stimulus for them, essentially. And the question is, do they now cut prices? I think that's unlikely. Do they potentially increase their investment? Maybe. Do they increase their imports? Maybe. Again, there is still lingering uncertainty over all of this because we don't know what actions exactly this administration will take to try to reconstitute those tariffs. So companies may no longer have to pay the tariffs going forward that they had been paying the IPA tariffs, you know, the national emergency tariffs. They may ultimately get that money back that they had been paying to the government. But then, as you point out, we don't know what the landscape is going to look like over the next few months. So there still may be a lot of uncertainty, a lot like this sort of paralysis that we've seen companies undergo to date because they don't know what their cost structure will be. They don't necessarily know what it will look like if they import from one company versus another. It's very costly to try to move supply chains to build a new factory in a different country. They're not reshoring this manufacturing, to be clear. What's mostly happening is they're just trying to reallocate which other countries offshore they are sourcing products from. So, you know, it'll be a nice shot in the arm to them, certainly. But it's not gonna basically take the sword of Damocles that's hanging over them completely away because they still have other forms of Donald Trump's wrath and abuse of power that they have to contend with in the coming months.
- [40:13]
Andrew Egger
Yeah, yeah. To that point, I think. I think I'm reading this right. This is just something else that Renita dropped in the slack, but this is from the New York Times. The budget lab at Yale University, a nonpartisan research center, calculated the impact of tariffs on consumers if those authorized under emergency powers were included. And if they weren't, it concluded, without IA tariffs, consumers will face an overall average effective tariff rate of 9.1%, which remains the highest since 1946, excluding 2025. If IPA tariffs had been allowed to stay into effect, this figure would have been 16.9%. So I think that that demonstrates it pretty well. Just, just once it's all kind of averaged out. What the model spits out is that that with these tariffs in place, the effective tariff rate was almost 17%, which astonishingly high now kicking down to about 9%, which while obviously far lower, is still a pretty significant pile of tariffs.
- [41:07]
Katherine Rampell
But again, to. To clarify that lower number, only 9% or whatever it was, that assumes no behavioral change or reaction from the administration. Right. That's all of the other tariffs that are currently in place because he's done a bunch of other tariffs in addition to the tariffs that the administration struck down. He's done like the steel and aluminum tariffs, for example. So that assumes no change. Tariffs are still quite high. They're very elevated relative to the historical norm. You know, like the highest since whatever. Smoot Hawley, with the exception of last year, they're still quite high. But if the administration does, as they have telegraph they plan to do, and then they. They raise all of those other tariffs even higher. So not just on steel and aluminum, but on lumber, on copper, on, you know, toys or whatever, whatever products had been caught in this IBA tariff dragnet. If you put them into different tariff authorities, that's going to boost the tariff rate higher again. It just will be on a slower time frame. Like it won't happen tomorrow that that tariff rate bounces back. But maybe in the next few months, we just have to wait and see.
- [42:17]
Andrew Egger
Yeah, yeah. Let me get one more. One more question here from the comments from Tristam29. How do you think the Democrats will respond to the strange dynamic that this ruling may actually help the Trump economy, despite the fact that Trump wanted it to go the other way? Let me Say one quick thing on this just because this has been kind of a hobby horse of mine.
- [42:34]
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- [43:35]
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- [44:01]
Andrew Egger
Kalshi trade on anything mine for a few months basically. Ever since I read your column, Katherine, about how in theory, Trump could get a big bump out of this, I have felt like Democrats should be messaging specifically about the tariffs being bad, not just about sort of broad affordability concerns. There's sort of this idea that like if you talk too much about tariffs, people's eyes glaze over and really what matters is prices. But if the tariffs go away, they no longer have these bad impacts into prices. I think it would have been good for Democrats to spend a little bit more time and energy spotlighting specifically how bad this policy was to set themselves up to do a little bit more ding dong the witch is dead now. But I don't know. I'm not a strategist. Nobody pays me to do these sorts of things. What do you make of this sort of weird moment? As far as.
- [44:47]
Katherine Rampell
I think Democrats have really struggled with messaging on this because they are historically very in favor of tariffs. Right. And up until Trump's, you know, political career, essentially they had in recent memory been the more pro tariff party and Republicans had been the more pro free trade party. That got completely scrambled. Now everybody is in favor of tariffs and Democrats have really. Except us. Yeah, there's dozens of us. Exactly. So Democrats have really struggled with, like, how to message on this. Just to give you an example, when Joe Biden was running for President in 2020, he had on his campaign website and he said in multiple speeches something to the effect of Trump's trade war with China is awful. It's killing jobs, it's raising prices, it's bad for the economy. And he said the same thing about some of the other tariff measures that Donald Trump had taken. He said that these were basically catastrophic economically, which was correct. It was the right take on things. Then Joe Biden got elected and what did he do? He kept all of those tariffs in place. There were a couple that he swapped out for, like, different kinds of trade restrictions. You know, he put in place quotas instead of tariffs on some things, but basically he kept them all in place after just telling the American people, again correctly, that this was really bad policy. And that's because, again, Democrats are generally more in favor of protectionist policies. So it sounded, I think, a little bit like the boy who cried wolf when Donald Trump came back into office, levied even higher tariffs. And Democrats were like, oh, no, no, no, but tariffs are bad. And they'd have to like, thread this needle by saying, well, tariffs are good in some cases, but these are not strategic enough. And it's like what you said that last time and then you ultimately agree or at least, you know, Joe Biden agreed that apparently they were strategic enough. So it's been a really difficult messaging challenge for Democrats. I am of the mind that, like, they should just take this moment to embrace the fact that, like, there are benefits to trade and there are serious downsides to protectionism and that they, that protectionist measures, including tariffs, often backfire and, and hurt the people you were trying to help, in part because maybe they're not strategically designed enough, but it's very hard to design tariffs that are even are strategic at this point in our economic development because we are primarily a services based economy and we import huge numbers of goods because we've moved on to higher value economic transactions. But that's something that Democrats have not taken my advice on, sadly. And I think that they will continue to struggle to figure out how to message on all of this. Like, yeah, they'll do. The whole Supreme Court issued a rebuke to Donald Trump, and that's great. And even Donald Trump's own chosen justices, largely, not all of them, said that this was a misuse of his power and abuse of his power. That's all great. And maybe they'll celebrate that the Trump text tax, which is again, tariffs or taxes, the Trump tax is gone. But I don't know. I mean, I think that they are going to continue to struggle with how to talk about this because of this legacy that they have of being pro protectionist and because some of their most important Democratic constituencies are pro protectionist and they can't really articulate what the, what the proposition, like what the value proposition is for the American economy or for consumers. Right. Like, Democrats are always chasing those, let's say, steel union votes, right? They are always chasing these votes of union members who are more likely to be in favor of tariffs, even though, you know, the union members in, in the Rust Belt are like, just not that into you Democrats these days, but they're still trying to chase them. So then it really puts Democrats in a bind of how do they message on affordability? Because these tariffs are increasing costs without, I would say without alienating these, these union voters who want the tariffs, but really they've already alienated them and they're, they're holding on to hope that they can bring them back.
- [49:19]
Andrew Egger
Yeah, yeah, yeah. That's so good. Feel like pure shit. Just want my Teamsters back. You know, it's a, it's a hard position to be in. We, we, I, I think you're totally right. I mean, I think it's, it's, it's gonna be difficult for Democrats to really capitalize on this in the same, like, at least to the same extent that they could in a different world, you know, six or seven universes over where we have our free Trade Democrats out in huge numbers. We're probably pretty close to wrapping this up. But let's just dwell on one more thing because we actually finally have a little bit of reporting about the President's reaction. And I mean, we mentioned this earlier, but really have not dwelt enough on just how apocalyptic Trump's rhetoric about this decision, if it were to go against him has been. I mean, he has pretty explicitly said these tariffs are what are Creating America's new golden age. And this Supreme Court decision is the difference between us being a rich country and a poor country. The Supreme Court, the Chief justice, cited that rhetoric in the decision today. The president says this is the difference between us being a rich country and a poor country.
- [50:23]
Katherine Rampell
He should check out the GDP numbers that came out this morning then.
- [50:26]
Andrew Egger
Yeah, those GDP numbers are not very good. The stock numbers have been doing pretty well, at least that's what they tell me. I'm stuck on here. I'm not really doing my Googling around, but ever since the. I think we have seen a bump in the markets since this decision came down, but we do. Trump has not actually tweeted yet since the decision, but we have some reporting from the New York Times. President Trump called the Supreme Court decision on tariffs, court, quote, a disgrace while speaking to the nation's governors, according to two people familiar with his comments. And here is CNN reporting. The White House is meeting about how to react to this. Trump called a disgrace when he found out and said, quote, these fucking courts. That's kind of a funny thing. I don't know anything else on all this before we, before we let the people go.
- [51:08]
Katherine Rampell
Catherine, I did want to just put a button on that GDP number that I mentioned this morning. So GDP numbers for the fourth quarter of last year were way down. I mean, we grew, but like, much less than expected. And that's largely because the trade deficit was at its. I forget what the superlative was, but as at its, like, highest level in a very long time, despite the fact that Donald Trump said that he was going to narrow trade deficits, not an objective I have, but his objective, he has completely failed on that. The economic golden age that Donald Trump has promised has not materialized. And it's largely because of the tariffs that he's put in place, among other poorly thought out economic decisions. And this is a gift that the Supreme Court has given him. It's a gift that the Supreme Court has given him. It's a gift that the Supreme Court has given Congress. And if Trump is smart, he will gladly accept it. Instead, I suspect he is going to snatch defeat from the jaws of victory.
- [52:10]
Andrew Egger
Yeah, it's a little bit of a gift to us, too. I mean, out here in the, in the spend and earn side of things, I don't know. It doesn't matter. I mean, I honestly don't care whether Democrats can, like, make a lot of hay out of this or not. I'm glad. I'm very happy. We will see. Like you said, we will see whether the Supreme Court can drag Trump kicking and screaming forward into his golden age that he wants but does not want to see happen without tariffs. And we will see whether they again, yeah, like you said, find a way to snatch defeat from the jaws of victory by Rube Goldberging up a new tariff regime just as bad as the old one. We will keep following all of that, but we've been going for 48 minutes. That's a long time. Time flies when you're having fun talking about good news. So thanks Catherine, for coming on and talking us through all of this. And thanks to all of you out there who have stuck around, who are presumably, I don't know, maybe you're mad, maybe you like tariffs, maybe you're sort of sitting in your armchair. You're not samba dancing. You are shaking your fist at Roberts and Gorsuch and Barrett and all these guys. But maybe not. But at any rate, we are glad that you are here with us. We're glad you're following the feed, tuning in for the lives. Hope you'll subscribe to the channel if you're not already. It really helps us out a lot. And head over to thebullwerk.com to sign up for, especially on this subject. Catherine's newsletter receipts. We write about it too in morning shots, but not as well or as often. And yeah, there's lots of good stuff. We're going to keep following the story and I'm sure there'll be a lot more to say about this decision and about this whole tariff story in the days and weeks ahead. So thanks Katherine and thanks everybody out there. We'll see you next time.
- [53:51]
Katherine Rampell
Thanks everyone.
- [53:52]
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