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The Clay Travis and Buck Sexton Show
The Truth with Lisa Boothe: Trump Tariffs After the Supreme Court: What the Ruling Means for Trade, China & U.S. Jobs
00:24:51
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- [00:00]
A
This is an iHeart podcast, Guaranteed Human. Welcome to the Truth with Lisa Booth, where we get to the heart of the issues that matter to you. Today, we're talking tariffs. More specifically, that Supreme Court decision 6 to 3 that President Trump can't use IPA to impose his tariff strategy. What does this mean for the president? What does it mean for his leverage moving forward? We're going to ask Nazak Nicotar. She's the former under Secretary of Commerce and an international trade attorney. She worked during President Trump's first administration. So we're going to talk to her about his trade strategy. What does it mean? Why did he do it in the first place? What do you need to know at home? There's also a report recently that there has been a decoupling from China as a result of President Trump's trade policies. So how important is that and what does this all mean moving forward? I'm sorry, but tariffs, they're complicated trade. It's complicated, but Nazak is going to break it down for us. So stay tuned. Well, Nazak, it's great to have you on. I interviewed you recently on Fox Business and you just did. So it was after the IBA Supreme Court ruling and you just did such a good job explaining everything. And I feel like tariffs and trade and all this stuff is so complex, and you just did such a great job of explaining it in layman's terms for the rest of us. So I appreciate you coming on and making the time.
- [01:30]
B
My pleasure. Good to be with you again and thank you for having me.
- [01:34]
A
Oh, well, thank you. Well, I guess walk us through real quick what the Supreme Court decision means for President Trump's tariff strategy in no longer being able to use ipa.
- [01:44]
B
Yeah, I mean, what the Supreme Court ultimately did was it just said, you know, the IPA authority is just to sort of limit transactions, stop transactions. You can't put tariffs on things through the IEBA authority. And that's really all it was, was just setting guardrails on, you know, if you want a tariff, you can't use this authority. But it didn't say that the president doesn't have tariff authority. The president has vast territory tariff authority. And so could the president quickly pivot to the range of other authorities he has, you know, beyond the traditional sort of the way we think about tariffs, the trade remedy, anti dumping, countervailing duty tariffs. Does he have section 232 national security tariffs, section 301 trade retaliatory. If our foreign trading partners practices harm us economically, we can retaliate discriminatory behavior by our trading partners, we can tariff that too. And so and of course, as we see now, the balance of payments, tariffs, everything that the President wants to tear up, he has other authority to do it. So I think he's moved past it and I think he was right. He said, look, the Supreme Court just has emboldened me to use other authorities that I actually have. And I think he's going to proceed in doing that. And I think that there's enough cause for him to want to use tariffs as leverage to get corrections from our trading partners, discriminatory behavior against us.
- [03:11]
A
You know, it's interesting because when you were on, because at face value, you know, you look at some of these other legal avenues, these different sections that President Trump will use is using, as you mentioned, sections 122, 301, 232 on their face, like they seem limiting in the sense of like with 301 and 232 you've got to do like these investigations. And then with 122 you're capped at 15% and there's an expiration date. And so on its face, these seem more limiting than what he could have potentially done under or what he was able to do under aipa. But you said on when I was co hosting that that's actually not the case. So why isn't it the case and why is it not limiting for him?
- [03:54]
B
Yeah, so, and that's a good way of sort of putting it. It's not limiting in terms of the scope and the height of the tariffs. The only constraint and consideration is it's a little bit more documentation. Right. A little bit more processes rather than just sort of a quick proclamation. So to give you an example, sort of the 232 tariff authorities, national security based imports of articles and then and their derivatives, so imports of the thing and then if that thing is embedded into a downstream product, those can all be tariffed if they're important to national security and then the tariffs apply globally. Now does the administration have to conduct an investigation and does it have 270 days to do a 232 investigation? Certainly. Does it need to, does it need 270 days to conduct a 232 investigation? Absolutely not. The Commerce Department ust here, they look at these sort of distortions constantly, all the time. So long as the administration, you know, looks at sort of maybe some third party reports by think tank and then supplements it with its own data and puts a cover memo on top of it. Especially since the 232, like IEBA isn't subject to the Administrative Procedures act, which has all of these sort of additional requirements, process requirements. The President can go out of the gate within just a few weeks with a whole bunch of new section, new tariffs under the section 232 authority. The other one, that's pretty nimble, and those authorities don't have timeframes. So long as the national security harm exists or threat exists, those tariffs can continue, and there's no cap at the level of those tariffs. Same with the sort of this authority that the President hasn't used before, Section 338 of the Trade Act. It's an old authority. It's never been used before to impose tariffs, but it's dormant in some respect, but it is still valid law. And all that requires is a presidential determination that foreign trading partners have discriminated against us. And then he can pose tariffs indefinitely for as long as those that discrimination continues. That one is capped at 50%. But those are just two of the several authorities he has. And I think he can execute 338 pretty instantaneously. And then the 232 is just a matter of weeks of putting together a report and some data and a proclamation that goes with it.
- [06:20]
A
I think the challenge with tariffs, it's rather complex, and even when you get down to, like, trade deficits. And so I think the American people, they don't really understand it. And the challenge with that is, I think, you know, after Liberation Day, President Trump sort of took authority over the economy, even though he's still trying to fix what Biden did because of tariffs, I guess. Walk us through, like, what's the purpose of President Trump's tariff strategy? Why was it necessary? What's behind it?
- [06:50]
B
You know, I think I commend the president. He's the first president who's decided to take on this ever ballooning American debt. $38.7 trillion, $6.4 billion accumulating on our national debt per day. That puts downward pressure on the currency. And that debt is financed by borrowing from abroad. And it also signals sort of a downward trend in jobs. It signals a downward trend in manufacturing and increased reliance on foreign goods. When I articulate all of those, nobody can credibly say any of those things are good for America yet. Why, year after year, you know, prior administrations and Congress have ignored this ballooning debt. So one way to sort of correct for this debt is to impose tariffs. What did the tariffs do? They slow American importation of goods. And then under President Trump, he's looking at deals you know, if foreign countries want or companies want exemptions from tariffs, and then they have to invest in the United States, increased FDI offsets sets the debt that we're in. And then obviously slowing tariffs slows down the deficit and the debt. That's sort of the economics side of it in terms of the national debt. But when I give you examples like the Europeans in terms of their discriminatory practices against US Autos, I wrote the autos investigation in the first Trump administration and the importation and the hollowing out of the American auto industry with its nexus to the defense sector, it's important for national security. We're becoming assemblers in the United States. The Europeans, also the Japanese and the South Korean. The imports have sort of suppressed domestic prices such that the component producers, the cool components in cars that are getting gadgety and have more compute power, those are getting more expensive because they can do cooler things. But because import pressures have kept car prices flat, those component producers offshore, because they now can't sell to the American OEMs at their increased prices, because the OEMs here are getting the. Getting crunched on import prices. So the component producers are getting this cost. Price. Increase in cost can translate it to increase in prices. So they're offshoring, which has led us to becoming to assemblers. What's even worse is when you look at a country like a region like Europe, they discriminate against American cars in Europe through standards. Then when they do trade agreements with foreign countries around the world, they forced them to adopt the discriminatory European standards that discriminate against American cars. So now, not only do we have Europe that's discriminating against us, but Europe forcing its trading partners to discriminate against us. And then when we're doing these tariffs, in the first Trump administration, Congress said, well, do you think our trading partners are harming national security? And my answer was resoundingly, yes. They're dumping steel into the United States. They're dumping aluminum. And look at what happened to the car, to cars. We have a lot of bad behavior by our trading partners to correct. And I commend President Trump, which has been the only president to date who's been taking the bull by the horns and take tackling these issues. They might be, in the short term, unpopular. But I think once the American public realizes what's happening, they will be supportive,
- [10:15]
A
you know, because right now, you know, you've got critics saying it's a tax on American goods. That's sort of the narrative from the left heading into the midterms, you've got groups like the Tax foundation that say in 2025 that the Trump tariffs amounted to an average tax increase per US household of $1,000. What do you say in response to that? And you know, is it a tax on American households?
- [10:42]
B
You know what I find really cute? These sort of economists just kind of make up formulas and make up math. And I say that as an economist, but I certainly don't do that make up formulas and make up math to, to be very self serving. I'll give you two probative pieces of information. One, a lot of importers have actually acknowledged the fact that because of the tariffs, they've been able to negotiate with foreign exporters to reduce their, their export prices to the United States so the importers can better absorb those tariffs. And so those tariffs, the incident of tariffs is not being passed to US customers in that arrangement, which means the foreign countries are bearing the brunt of the tariffs. I love that. Number two, I looked at the cpi, the Consumer Price Index and the Producers Price Index for the White House. They had asked me to look at a few data indicators for them. And the CPI and the PPI, they're both within our target inflation rate of 2%. They're slightly above 2, but they've moderated significantly from the 2022, 2023 highs. 7 to 9% inflation during the Biden administration. And now we're around the 2% target rate, hovering at 2.7. That tells me that the President's trade policies have done just the opposite. They haven't caused inflation, they've actually worked to moderate inflation. And why is that happening? Wages will, wages are going up. More manufacturing is happening in the United States. Consumers can better absorb any small price increases. But as I just mentioned, the price increases haven't been what we see across the board because of the CPI and the PPI indicator. So economists can just make up numbers. But, but, but the proof is in the pudding. And the pudding is the CPI and the ppi, which are significantly below the Biden administration. And thanks to President Trump, he's moderated that in 2025 with his policies.
- [12:41]
A
You know what happens? I think it's something you would know. 175 billion right under the IPA.
- [12:49]
B
Yeah, 177 plus. Those are just rough estimates.
- [12:52]
A
Yeah, I've heard different numbers, but roughly around there. So you know, all that money's already been collected. So like what happens after? You know what happens now with that money?
- [13:03]
B
Yeah, that's, that's a big sort of focus of debate. I think there's going to be three likely scenarios. I think one, the administration could just set up its own process. The Department of Justice has already articulated that it intends to comply with the Supreme Court's decision. So could the administration set up its own process to start issuing refunds? Yes. To option two, which I think is more likely is that the US Government, the administration is going to wait for the Court of International Trade to issue an opinion on, you know, how refunds should be administered. And so I think they're waiting for that. And then they'll, if they need to, they'll set up a process or they'll just have litigants litigate to get tariff refunds on an individual by individual basis. What I think is also equally likely to happen is in addition to the President, the administration just waiting for the court to issue an opinion on how the process should work, I think that they're also going to look at ways of disincentivizing companies from recovering the tariffs. And there's a really rational basis for doing this. These tariffs, these IEBA tariffs were imposed to deal with a national security emergency. Whether it's fentanyl, the border crisis, you know, India not buying Russian energy, those emergencies haven't gone away. So if the president, the president could very easily articulate and say, listen, I have to, I was trying to deal with emergencies through punishment, economic punishment to these countries. Now that the court has taken that power away from me, the emergency still exist and now I have to recoup the amount lost from the punishment by paying those back. So I'm going to now proceed with new authorities in a way double the level of punishment for a period of time on these countries to make up for the fact that the court made me lose time. Companies, if you, if you agree to not seek a tariff refund, all for a period of time, lower your punishment, lower the tariffs you have to pay now that the president feels like he's almost has to for about a year, double the punishment to make up for the lost time in 2025. And then companies, if you agree not to seek refunds, maybe I'll reduce the forward looking tariffs because you've, you've allowed me to keep the backward, the 2025 tariffs, if that makes sense. I could very much see him doing that. And I don't think he would be wrong in asking companies to cooperate with him that way.
- [15:36]
A
Quick break. More on the other side. If you like what you're hearing, please share on social media or send it to your family. And friends, yes. It was reported that while President Trump's tariffs helped lower the trade deficit with several major US trading partners, the total US trade deficit for 2025 slipped by just 0.2%. Does that tell the full picture or can you unpack that for us?
- [16:01]
B
Yeah, I mean, I think that the trade, there's, you know, it takes a while for the economy to adjust. And I think just because the trade deficit was reduced slightly, you know, we're not going to have overnight impacts if we're going to reduce our reliance on imports. Companies have to shift their supply chains, they have to requalify products, they have to find alternative sources in the United States. And if we don't have adequate capacity in the United States to be alternative suppliers from within our own borders, then we've got to build up those supply chains. So the fact that it's going to take a little while to sort of real see dents in the trade deficit doesn't mean. Right. That. Not to suggest that you're saying that, but to those detractors, it doesn't mean that it's not working. It just means that the supply chain needs to shift. Manufacturers have to change their behavior. Products have to be qualified. We need to build more here. But once we do that, and you don't take the foot off the gas pedal because you're not accelerating in half a second, you keep your foot on the gas pedal because you know that that accelerant is going to ultimately happen. And again, pointing to the data that we Talked about earlier, $38 trillion debt, the downward pressure on the currency, the more import reliant that's making us look at what's happening with China. I think, I think we need to do everything we can to incentivize more domestically sourced goods, certainly for national security and defense capabilities as well.
- [17:28]
A
You know, and on that with China, there was a new analysis from JPMorgan Chase Institute that found that the tariffs, the tariff strategy has driven a wedge between businesses, American businesses and Chinese suppliers. There has been some decoupling as a result of these tariffs. What's the significance of that and how significant is this China is?
- [17:50]
B
China is unlike sort of any trading partner that we've seen before. When it captures supply chains, it's demonstrated that it's willing to use it to harm American interests. So I think businesses are being clear eyed. I remember in the first Trump administration, we were, we were talking about the risks of China and everybody looked at us like we had, you know, five heads. But I think as they come to themselves witness China's unfair trading practices. The administration, first administration ever to call this stuff out. Companies then started taking notice and then slowly started realizing, wait, the administration's right, that China is stealing our ip. Then they indigenize and then they wipe us out. I think companies started realizing that there's a problem. Different companies reacted at different sort of paces. But I think the move is happening away from China and whether, you know, whether impose higher tariffs, the administration ultimately on China or not. I think businesses now realize, especially, especially with the magnet situation, that increasing or keeping reliance on China is a really risky proposition. They're seeing that now in the battery space where China has such a stranglehold over the battery supply chain and we're just not going to be able to move ourselves in the immediate term away from Chinese batteries unless we have more domestic capacity and technology growth. I think companies are, because they're being so heavily impacted, they're really seeing that there was a merit to doing that, and they're choosing sometimes to decouple themselves because of those risks.
- [19:25]
A
Well, yeah, and we've seen China threaten us before with like antibiotics during COVID and, you know, kind of holding that power over our heads when they're rightfully facing criticism for unleashing it on the world.
- [19:40]
B
Yeah. And even. And one thing I just wanted sort of emphasize is even about things that we don't see publicly, when companies do their own independent negotiations with the Chinese, when the Chinese realize that they have the supply chain, they put some pretty onerous and oppressive terms on American companies who just simply need a battery right. For medical equipment, etc. And so I think that realization, things that we don't necessarily hear about publicly because these are just agreement by agreement between two companies, I think that is really spooking American companies too, to move away from China.
- [20:13]
A
We still dealing with a supply chain crisis from COVID You know, that's.
- [20:19]
B
I don't think that the two things. I don't think that the supply chain crisis is there anymore with the level of acuteness or really to any significant material degree at all. I think what's remained is a little bit of the PTSD that companies realize that if they don't start finding domestic sourcing now, that they will be in jeopardy. But the other thing that has been a little bit of awakening for companies and industries and certainly in the US is that even our trading partners, you know, during COVID we couldn't get a lot of aerospace parts out of Mexico because they had sent their factory workers home. And then that impacted our commercial and military readiness in the aerospace and defense supply chain. And so even when we do have trading partners that, you know, we generally more or less trust or we have trading agreements with, I think the government has realized that we need to build in more and more into these trade agreements that they won't, to the extent that there's a pandemic or some global crisis like that, they're not just going to arbitrarily restrict us from having critical supply chains that we rely on them for. That also feeds into the narrative of do we really want to rely on foreign trading partners for things that are critical to national security? Adam Smith, the father of free trade, even underscored in his book wealth of nations that, that, that a country should not depend on its neighbors for things that are critical to national defense. And I think Covid was an important awakening there.
- [21:54]
A
Before we go, to what extent have the, you've touched upon it a little bit earlier, but to what extent have these tariffs brought manufacturing back to the United States? You know, how long of a road is that process?
- [22:08]
B
You know, let me, I want to answer this, but by one something really important. The. In the first Trump administration, I was speaking at an event about the 232 tariffs. I had to defend those a lot until the world started understanding the merits of them. And a gentleman in the front of the audience asked me, he said, do you know how much the Trump tariffs are costing the average American family? And I responded by saying, do you understand how much foreign countries predatory economic practices are eroding wages such that mothers and fathers have to work multiple jobs now to have enough money to have the dignity to put food, food on the table for their families and pencils and their children's backpacks to send them to school. Well, that got him real quiet. My point is this, and I'm glad you're asking this because we have to get our manufacturing industry up and running. In some of the poorest parts of the country, there's one manufacturing facility, and if that manufacturing facility goes, the workers there don't even have options. We need a manufacturing renaissance in the United States and the President has initiated that with forcing countries to, to rectify their economic harms to the United States of the past by investing in critical capabilities here. We need more jobs. And with, with more jobs, we, we should be through tariffs, generating higher wages so we can get to that sort of American dream where in a family, one person, or maybe if both want to work, both wanna work. But that's a family choice, not a necessity. And that comes with more manufacturing job options here and better wages. And those will come once we eliminate unfair trading practices that have significantly suppressed wages. In 1980, 70% of an average American's income was spent on just necessities. In 2024, the expenditure of the average American exceeded income by 6%. That is how it's not necessarily that we're buying more and more. We're buying it all the cheap junk from China. So that's offset. But it's the fact that our wages just haven't increased with the amount that we need to the natural cost increases today. So we very much need to tackle this wage suppression caused by foreign predatory economic practices head on. And that's one of the things that the Trump administration is doing.
- [24:30]
A
Very interesting, complex stuff. Thank you so much for coming on the show.
- [24:33]
B
Show.
- [24:33]
A
Really appreciate you breaking this down for us.
- [24:35]
B
My pleasure, Lisa. Thank you for having me.
- [24:37]
A
Was Nazak Nicotar, former undersecretary of commerce for President Trump and also an international trade attorney. Appreciate her for coming on the show. Appreciate you guys at home for listening every Tuesday and Thursday. You can listen throughout the week. I also want to thank John Cassio, my producer, for putting the show together. Until next time, this is an iHeart podcast. Guaranteed Human.