Masters in Business: Special Edition

Neal Katyal on Challenging Trump's Global Tariffs
Host: Barry Ritholtz, Bloomberg | Date: September 3, 2025

Overview

This episode features a timely and in-depth discussion between Barry Ritholtz and Neal Katyal, the former U.S. Solicitor General and lead attorney in VOS Selections v. Donald Trump, the landmark appellate case challenging the legality of tariffs imposed by President Trump. The conversation explores the constitutional boundaries of presidential power, implications for the markets and global economy, and the future of American jurisprudence on executive authority.

Uniquely, the episode is split into two parts:

1. An immediate postscript after Katyal’s appellate victory (7-4 decision) that found Trump's tariffs unconstitutional.
2. The original, longer interview recorded before the decision had been announced.

1. Post-Victory Discussion: Implications and Next Steps

(Timestamps: 05:53–32:02)

Timeline and Katyal’s Reaction

• The Decision Drop:
  • Decision came unexpectedly late Friday (Aug 29).
  • Katyal found out at the same time as the rest of the world—such decisions can move markets.
  • Quote: "They let me know the decision at the very same time, they let the world know. This is the kind of information that does move markets." (Katyal, 05:53)

The Constitutional Holding

• Limits of Presidential Power:
  • The court ruled that imposing tariffs without Congressional authorization is unconstitutional.
  • Congress has not—and constitutionally cannot—delegate such sweeping power solely to the President.
  • Quote: "Maybe these tariffs are a good idea, maybe they're a bad idea, but they can't be imposed by the President's pen alone. You gotta go to Congress..." (Katyal, 07:41)
  • Remedies and exact scope will be determined by lower court, per remand.

Remedy & Next Steps

• Remand to International Court of Trade:
  • Technical issue: scope of parties affected by ruling.
  • Recent Supreme Court guidance on class action remedies necessitated remand.
  • Likely, most of Trump's tariffs are illegal; affected parties may pursue remedies.
  • Quote: "[The remand] is pretty much a sideshow at this point... the federal government has a strong interest in resolving this question." (Katyal, 09:21)
• Anticipated Government Appeal:
  • Likely government files for Supreme Court review (certiorari).
  • Supreme Court usually grants review when U.S. government requests and when major consequences are at stake.
  • Timeline: Petition must be filed within 45 days due to expedited schedule (around Oct 14).

Significance of the Dissent

• The dissent argued the President’s mere declaration of emergency is sufficient, rendering the statutory requirement (emergency/unusual/extraordinary) meaningless.
• Majority and Katyal reject "carte blanche deference" to the President.
  • Quote: "...if the dissent were right, it basically reads the word 'emergency' out of the statute. It gives carte blanche deference to the president." (Katyal, 12:43)

Constitutional and Economic Context

• The ruling is a return to original separation of powers, not a rebalancing.
• Quote: "Congress makes the laws, the President enforces them, the courts decide whether those laws are legal or not... the court is doing here what the courts have done time immemorial in other cases..." (Katyal, 16:59)
• Tariffs are a tax with major economic impact—largest since 1993 (per Tax Foundation, later in the episode).

Major Questions Doctrine

• Supreme Court’s doctrine: significant policy questions require clear Congressional authorization ("no hiding elephants in mouse holes").
• Used previously to strike down overreaches by Biden Admin; applies to Trump case as well.
  • Quote: "This isn't just an elephant in a mouse hole, it's a galaxy in a keyhole." (Katyal, 20:27)
• A president’s expansive reading of a statute is insufficient for such sweeping actions.

Odds, Timeline, and Tariffs’ Status

• If Supreme Court declines review, tariffs become illegal after 45-day stay.
• During stay (pending possible SCOTUS review), tariffs remain in place.
• Expedited judicial process reflects recognition of urgency and economic impact.
  • Quote: "It is moving rapidly, and that's common in presidential power cases because there's so much at stake." (Katyal, 30:49)

2. Pre-Decision Interview: Katyal’s Background, Strategy, and Broader Legal Issues

(Timestamps: 32:27–76:43)

Neal Katyal’s Legal Journey

• Originally envisioned life as a history professor before pivoting to law.
• Involvement in landmark cases:
  • Guantanamo Bay (first case, on separation of powers in military trials).
  • Voting Rights Act, Moore v. Harper (independent state legislature theory).
  • Extensive appellate and Supreme Court experience (over 50 arguments).
  • Memorable moment: His first Supreme Court win changed his life and led to working with Barack Obama. (39:55)

The VOS Selections v. Trump Tariff Case: Core Arguments

• Separation of Powers:

  • Article I, Section 8 assigns the power to impose taxes, duties, and tariffs exclusively to Congress.
  • Aggressive assertion: President can’t bypass Congress to impose tariffs because it's politically inconvenient.
    • Quote: "Article 1, section 8. They gave the power to tariff expressly to... Congress in the same way as they did over matters of military justice." (Katyal, 49:06)

• No Statutory Authority:

  • Neither the International Emergency Economic Powers Act (IEEPA, 1977) nor Trade Act (1974) grant tariff authority in this context.
    • IEEPA never intended as a tariff power; Trump went to Congress for authority and failed.
    • Resorting to "emergency" language not justified by facts (trade deficits are "persistent" not "unusual and extraordinary").
    • Quote: "About a hundred percent. Nobody... thought that this was about the tariff power. ...They get a, A plus plus for creativity. ...Unfortunately, they get an F and they fall down on the job." (Katyal, 22:12)

• Slippery Slope Concerns:

  • If a president can self-justify any trade action as an emergency, limits all but disappear.
    • Quote: "If the President can levy tariffs, taxes, duties on his own without Congress... what can he do?" (Katyal, 56:50)

The Legal Process: Trial and Appeal

• Plaintiffs (small businesses) sought relief, saying tariffs threatened their viability.
• Katyal joined at appellate stage after trial court ruled for plaintiffs.
• Federal Circuit expedited the appeal, recognizing the case's urgency and market impact.
  • Unusual full en banc hearing (all 11 judges), rare and indicative of the case’s significance.
  • Katyal describes prepping for high-stakes appellate arguments:
    • Relentless practice, simulating tough questioning, strategic response crafting.

Possible Remedies and Business Impact

• Plaintiffs’ goal:
  • Immediate declaration that tariffs are unconstitutional.
  • Refunds for prior tariff payments by businesses are possible but unbriefed, and likely to lead to protracted litigation.
• Consumers:
  • Tariffs act as a VAT (value-added tax); refunds for consumers are unlikely.
    • "That money's gone." (Ritholtz, 71:02)
    • "I think you're right to characterize tariffs as a tax. I think you're 100% right." (Katyal, 71:10)

Emergency Power and IEEPA

• IEEPA requires an "unusual and extraordinary threat." Trump's order cited a 50-year trade deficit—contradicting the existence of an emergency.
• The episode draws an analogy to Lincoln, who, even during the Civil War, sought Congress’s approval for emergency actions.

Notable Quotes & Memorable Moments

• On the Surprise of the Decision:

  • "I look at it and I'm like, well, I might as well see what this is. I assumed it was just some, you know, minor thing. And they're like, whoa, it's the decision!" (Katyal, 05:53)

• On Presidential Power:

  • "It's a very dangerous thing. ...You don't want presidents to have that kind of sweeping power on their own." (Katyal, 75:30)

• On Legal Practice:

  • "The minute that I don't have those butterflies, I'm going to go do something else." (Katyal, 63:31)
  • "[Practice sessions] are really, I think, the secret sauce." (Katyal, 66:22)

• On the case's implications:

  • "If you enjoy this conversation, well, check out any of the other 500 we've done over the past 12 years..." (Ritholtz, 76:43)

Key Segments & Timestamps

| Segment | Timestamp | |------------------------------------------------------------------|----------------------| | Postscript/Victory reaction, next legal steps | 05:53–32:02 | | Katyal’s personal and professional background | 32:27–41:56 | | Voting Rights Act, Moore v. Harper, judicial philosophy | 41:56–46:21 | | Case specifics: background, strategies, arguments | 47:39–66:22 | | Legal process, remedies, Supreme Court speculation | 66:22–76:43 |

Tone and Style

The episode’s tone is professional and accessible, blending legal precision with market relevance. Katyal is articulate, thoughtful, and direct, drawing on both legal theory and real-world ramifications. Ritholtz steers the discussion with an eye towards business and constitutional stakes.

Summary

This episode provides an essential overview of the most significant legal challenge to presidential authority over trade in recent memory. Neal Katyal offers a masterclass on the intersection of law, markets, and the Constitution, articulating why tariffs imposed without Congressional input threaten the bedrock of the American system and pose profound risks to markets and the global economy. The appellate court’s dramatic ruling—framed through real-time insights—underscores the enduring importance of checks and balances, and previews battles to come before the Supreme Court. Whether a listener is interested in law, business, or American government, this episode is rich with nuanced analysis and urgent contemporary relevance.