GZERO World with Ian Bremmer

Episode: Tariffs: what comes next with Paul Krugman and Scott Lincicome
Date: March 7, 2026

Episode Overview

This episode of GZERO World with Ian Bremmer features an in-depth discussion on the recent U.S. Supreme Court decision curbing presidential power over tariffs—a core part of President Trump’s economic agenda—and the subsequent maneuvering by the administration to reinstate tariffs via a different statute. Economist Paul Krugman and Cato Institute trade expert Scott Lincicome break down the legal, political, and economic ramifications of the new landscape in U.S. trade policy, its impact on midterm elections, and what it signals about American power, globalization, and checks and balances.

Key Discussion Points & Insights

1. Supreme Court Decision and Its Implications

Timestamps: [00:02]–[03:17]

• Supreme Court Strikes Down IEEPA Tariffs

  • The Court ruled 6-3 that President Trump lacked authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA), even with national emergency claims.
  • Notably, two Trump-appointed justices sided against the administration—a strong check on executive power.

• Switch to Section 122 Tariffs

  • Within hours, the administration invoked Section 122 of the 1974 Trade Act to impose fresh tariffs (10% and 15%).
  • Paul Krugman: Critically observes Section 122’s obscure language and doubts its legal standing:

    "Section 122...is extremely—so far as the language can be interpreted at all, it's not even clear what it means. It says balance of payments deficit. Nobody in these days knows what that means, but it's very clear... it's not one we have." ([03:42])

• Legal Uncertainty Over Section 122

  • Scott Lincicome: Notes Section 122 does grant tariff authority but the conditions (i.e., a balance of payments crisis) are questionable:

    "The question becomes, do the conditions for which that are needed...do they exist? Courts tend to be deferential to administrative expertise..." ([04:15])

2. The Utility and Fragility of Tariff Threats

Timestamps: [06:04]–[07:28]

• Did the Threat of Tariffs Foster Trade Deals?

  • U.S. negotiators used the broad threat of IEEPA tariffs as leverage in fast-tracked, minimally detailed trade negotiations.
  • Lincicome:

    "They got you a press conference and a website that lists some details, but whether that actually translates to tangible investments and new market access is still a really big open question." ([06:38])

• European Response

  • Europe struggled to deliver promises of bigger U.S. investments, embarrassed itself chasing concessions for tariffs the President wasn’t legally able to impose.
  • Krugman:

    "The Europeans are, to use the technical term, pissed. I mean, they kind of humiliated themselves to get some concessions... that it turns out Trump didn’t have the authority to impose in the first place." ([07:28])

3. U.S. Globalization and Changing Political Attitudes

Timestamps: [09:02]–[11:54]

• Political Class vs. Public Sentiment

  • Washington politicians from both parties have soured on free trade, but actual American import/export behaviors suggest ongoing globalization.
  • Lincicome:

    "Globalization is going on in practice. Although I think the political rhetoric is... extremely anti-globalization." ([09:37])

• Tariffs Are Unpopular with the Public

  • Krugman:

    "...the tariffs are wildly unpopular. I've never seen anything really a major policy issue where the policies being currently pursued are as unpopular..." ([10:27])

  • Americans claim to support “Buy American,” but that evaporates when personal costs rise.
  • Lincicome:

    "...the American people’s nationalism is about an inch deep...if they're willing to pay $10 more...support collapses." ([11:22])

4. Economic Impacts and Congressional Incentives

Timestamps: [11:54]–[14:11]

• Tariffs as Government Revenue

  • Tariffs generate about 1% of GDP—non-trivial, but not massively transformative for the federal budget.
  • Krugman:

    "...the whole Trump tariff thing was adding around 1% of GDP in revenue...less than the proposed increase in spending at the Pentagon." ([12:16])

• Bad Tax Policy?

  • Lincicome raises the trade-off: some revenue gained, but harms overall productivity, growth, and economic efficiency.
  • Lincicome:

    "...if you're doing so at the expense of not just higher prices, but less productivity and economic efficiency...it's not really a great trade off." ([13:15])

5. Political Strategy for Trump and Electoral Implications

Timestamps: [14:38]–[17:25]

• Advice for Trump's Economic Messaging
  • Lincicome suggests focusing on affordability and supply-side reforms, but acknowledges entrenched public perceptions and limited short-term impacts.

    "I don't know if there's that much they can really do." ([14:59])

  • Krugman: True benefit of any policy change would not be felt quickly; most people don’t focus on policy intricacies:

    "...the most important thing Trump could do right now would be basically not to be Trump...not go around boasting about how great it is..." ([15:43])

6. Refunds, Litigation, and Corporate Incentives

Timestamps: [17:25]–[20:31]

• Huge Potential Refunds at Stake

  • Businesses stand to recover up to $175 billion in illegal tariffs.
  • Lincicome:

    "...I think they [CEOs] will go after that money, but do so via the litigation that's likely going to be necessary." ([18:05])

• Unlikely for Consumers to Benefit

  • Direct refunds unlikely for individual consumers—system is set up to refund those who paid the tariffs (importers), not necessarily those who bore the final cost.
  • Krugman:

    "Will any of that go to you and me? Will any of that show up at the store? And the answer, as far as we can tell, is no." ([19:08])

7. Judiciary as a Check on Executive Power

Timestamps: [20:31]–[22:30]

• Restoring Balance: Supreme Court as a Check
  • The Court’s decision, with compliance by Trump’s administration, demonstrates functioning limits on the presidency.
  • Krugman:

    "...for all that talk about Trump being uncontainable...he isn't actually apparently able to simply give flat out illegal instructions... we are seeing an object lesson in the limits of presidential power." ([21:08])

  • Lincicome:

    "...the ability of the little guy to stand up to President Trump and to the US government is also pretty great news for the Republic." ([22:02])

Notable Quotes

• "Pissed Europeans is kind of a new thing on the world stage and they’re kind of trying to...throw their weight around a bit more."
  — Paul Krugman ([07:28])
• "The American people’s nationalism is about an inch deep."
  — Scott Lincicome ([11:22])
• "The most important thing Trump could do right now would be basically not to be Trump."
  — Paul Krugman ([15:43])
• "The ability of the little guy to stand up to President Trump and to the US government is also pretty great news for the Republic."
  — Scott Lincicome ([22:02])

Key Segment Timestamps

• [02:39] — Initial reactions to the Supreme Court ruling
• [03:42] — Legality of Section 122 tariffs
• [06:04] — Tariffs as negotiation leverage; reality vs. perception of new trade deals
• [09:37] — U.S. political attitudes toward globalization and trade
• [12:16] — Fiscal impact of tariffs
• [14:59] — Midterm election economic strategy
• [18:05] — Corporate response to tariff refunds; scale of potential refunds
• [21:08] — Supreme Court as a check on the presidency

Conclusion

The episode provides a robust analysis of the evolving legal and political framework shaping U.S. trade policy, the interplay of executive and judicial power, the real-world effectiveness of tariffs as a tool, and the contrasting narratives on globalization among American leaders and the public. Krugman and Lincicome offer clear-eyed, often humorous reflections, highlighting both the technical complexities and the human, economic, and political realities at play.