Did a Wine Importer Just Sink Trump’s Trade War?

Summary

Podcast Summary: "Did a Wine Importer Just Sink Trump’s Trade War?"

Episode Details

• Title: Did a Wine Importer Just Sink Trump’s Trade War?
• Podcast: The Daily
• Host/Author: The New York Times, Hosted by Michael Barbaro
• Release Date: May 30, 2025

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Introduction

In this episode of The Daily, Rachel Abrams delves into a significant legal ruling that challenges President Trump's trade policies. The focus centers on Victor Schwartz, a wine importer who has become a pivotal figure in a lawsuit against the administration's tariffs. The episode explores the implications of the court's decision on the ongoing trade war and examines possible future actions by the Trump administration.

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Court Ruling Threatens Trump's Tariff Agenda

Key Highlights:

• Legal Decision: A federal court ruled that many of President Trump's tariffs are illegal, casting uncertainty over the continuation of his trade war strategy.
• Impact: This ruling undermines the president's ability to unilaterally impose tariffs, historically used as leverage in negotiations with trading partners.

Notable Quote:

"Much of Trump's tariffs are illegal." — Rachel Abrams [00:22]

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Victor Schwartz: Reluctant Spokesperson

Background: Victor Schwartz, the lead plaintiff in the lawsuit, is a wine importer whose business has been directly affected by the tariffs. His decision to challenge the administration's policies has thrust him into the national spotlight.

Key Points:

• Unexpected Role: Schwartz did not seek out this role but felt compelled to act amidst widespread dissatisfaction with the administration's policies.
• Business Challenges: The tariffs require businesses like his to adjust fixed pricing strategies and deal with significant cash flow issues due to upfront tariff payments.

Notable Quotes:

"I'm just crazy." — Victor Schwartz [01:18]

"If I don't step up, then how can I expect anybody else to?" — Victor Schwartz [03:38]

Emotional Response: Upon learning about the court ruling, Schwartz experienced a mix of confusion and elation. Initially unsure of the judgment's significance, he quickly realized the positive impact it would have on his business and the broader trade landscape.

Notable Quote:

"I laughed like a lunatic." — Victor Schwartz [06:37]

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The Legal Battle: Details and Implications

Case Overview: The lawsuit, Vos Elections Inc. Vs Trump et al., challenges the authority under the 1977 International Emergency Economic Powers Act (IEEPA) that the Trump administration has utilized to implement broad tariffs on various trading partners.

Court's Decision:

• Scope of Tariffs: The court ruled that the 10% across-the-board tariffs on countries like Mexico, Canada, and China exceed the legal authority granted by the IEEPA.
• Future Legal Proceedings: The ruling is expected to be appealed, potentially reaching the Supreme Court.

Notable Quote:

"These tariffs are too broad of a use of the law." — Gina Smilek [12:50]

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Potential Responses from the Trump Administration

Options Available:

1. Appealing the Ruling: The administration has already sought a stay on the ruling, indicating plans to challenge the decision legally.
2. Alternative Tariff Mechanisms: Utilizing other provisions within trade law to impose sector-specific tariffs or targeting individual countries based on national security or unfair trade practices.

Negotiation Dynamics: The ruling complicates Trump's unpredictable negotiation tactics, which previously relied on sudden tariff implementations to gain leverage. The administration may need to adopt more measured approaches, though there's concern it could lead to more drastic measures.

Notable Quotes:

"The word of the day is probably chaos." — Gina Smilek [15:05]

"It feels like this ruling would bring relief, but it sounds like it could actually prompt even more aggressive action." — Rachel Abrams [20:50]

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Broader Impact on the Trade War

Economic Repercussions:

• Market Reaction: Financial markets have responded positively to the ruling, anticipating a potential de-escalation of the trade tensions.
• Negotiation Pressure: The administration faces increased pressure to achieve trade deals, with the possibility of introducing more targeted tariffs if negotiations stall.

International Relations:

• European Union: The EU remains a significant player, with ongoing threats of hefty tariffs that could strain relations further.
• Other Trading Partners: Sector-specific tariffs on industries like pharmaceuticals could emerge, affecting global trade dynamics.

Notable Quote:

"This is a new chapter in the trade war, but the trade war is definitely not over." — Gina Smilek [21:01]

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Conclusion

The court's ruling marks a pivotal moment in President Trump's trade war, challenging the legal foundations of his tariff strategies. Victor Schwartz's courageous stance highlights the tangible impact of these policies on small businesses. As the administration navigates its limited options, the future of international trade agreements remains uncertain, with potential for both de-escalation and intensified economic measures.

Final Thought: While the immediate reaction might suggest a victory for those opposing the tariffs, the broader implications indicate a complex and evolving trade landscape that remains fraught with challenges.

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This detailed summary captures the essence of the episode, highlighting the legal battle against Trump's tariffs, the personal story of Victor Schwartz, and the broader implications for international trade. Notable quotes with timestamps provide insight into key moments and perspectives discussed in the podcast.

Transcript

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[Rachel Abrams]

From the New York Times, I'm Rachel Abrams and this is the Daily In a blow that has threatened to derail President Trump's trade agenda, a federal court ruled on Wednesday that many of the President's tariffs are, in fact, illegal. That decision makes the future of Trump's trade war even more uncertain. Today I talk to Victor Schwartz, the wine importer at the center of the case, about why he decided to take on the President, and to my colleague Gina Smilek on Trump's options as he scrambles to keep his trade war Alive. It's Friday, May 30th. Victor?

[Victor Schwartz]

Yes. Hello.

[Rachel Abrams]

Hi, it's Rachel Abrams from the Daily. How are you?

[Victor Schwartz]

I'm just crazy.

[Rachel Abrams]

You're having quite the day.

[Victor Schwartz]

It has just been nonstop. I got a call from ABC News in the middle of dinner. They wanted to come over to my place, which kind of got me nervous because I thought there was some, like, weirdo. So I grilled them a bit and I hope they're real. I said, okay, well meet me outside my building. I'm not letting you in my house. So that was fine. They were very nice people. And then I got a call from the CNN in Hong Kong. So that was crazy. And then the phone's been ringing. Everybody wants to get my comment.

[Rachel Abrams]

Obviously, the reason that you're getting hounded is that you were the lead plaintiff on a case that got ruled on Wednesday afternoon.

[Victor Schwartz]

Yeah, yeah, that's right.

[Rachel Abrams]

So the ruling basically said, you know, much of Trump's tariffs are illegal.

[Victor Schwartz]

Correct.

[Rachel Abrams]

Can you just bring us to the moment where you found out about the court ruling? How did you find out and how did you feel?

[Victor Schwartz]

Well, I was literally preparing dinner. I was looking for a recipe for linguine and clams, and I walked over the computer, I looked at one before, and then I got an email from Sarah Albrecht, who is the head of the Liberty justice center, and the wonderful people who have taken our case pro bono. And they're the ones doing the heavy lifting, not me. I'm just the legal spokesmodel. So I read that and of course I'm completely confused because I don't know the legal leads. It was a summary judgment. Is that good, bad? I don't know. I immediately got in touch with a friend of mine who's a lawyer. He explained it, that it was very good. So just kind of been off to the races.

[Rachel Abrams]

How did you become the spokesmodel for this lawsuit?

[Victor Schwartz]

Because. Because I'll tell you. I'll tell you, it is also strange and backdoor. It's, like, unintentional. This is in March, and we're talking brunch, and we're talking about the tariffs, because that was on everyone's mind. We have having a conversation with a cousin of my wife's, and he brought up the fact that his former law professor was bringing a case against the tariffs. And I said, wow, this is great, because I wanted to give my two cents about what was going on in my business, in the wine business. You know, I got in touch with him right away, and he got right back to me, got right back to me, and we had a wonderful conversation. I told him my tales of woe about being in the wine business and an importer in the world of threatened tariffs. And he said, okay, fine, that sounds good. And then three days later, they asked if I would be the lead plaintiff. And that's when I got nervous. Well, what does that entail? Yeah, let me talk to my wife and kids. And of course, they were all kind of nervous because the administration is known for being vengeful. And, you know, we're a heavily regulated business. We have a lot of business in front of the government, whether it's importation, FDA rules, et cetera, et cetera, et cetera, label requirements. So it's like, well, should I do this? Should I not? You know, I don't really want to stick my neck out. And then I thought about all those billionaires that I'm just so pissed off about doing nothing. And I'm going. We're all sitting around, we're all complaining. We're all saying, hey, what can we do about this? You know, what can I do? Everyone's feeling powerless. And I said, this just landed on my plate. If I don't step up, then how can I expect anybody else to? And I just felt it was incumbent upon me to do it and let the chips fall where they may.

[Rachel Abrams]

You describe this as a tale of woe for a wine importer. I want to understand.

[Victor Schwartz]

Tale of woe. Yes.

[Rachel Abrams]

Well, tell us the tale of woe.

[Victor Schwartz]

Well, first of all, understand, you know, number one, we're very heavily regulated business. So, for instance, we have to post our prices, our discounts fixed with the state over a month in advance before we start selling oh, and we can't change them. So it's like I've got a five case price, $120 a case or something like that. I can't say, oh, it's a tariff, I'm going to Change that to 150. It's done, it's fixed. So the tariff liberation, quote, unquote, liberation day. I call it Strangulation day. So we had to really jump on this right away and try to make some decisions in a very unclear situation. So there's that. Plus where is this tariff money going to come from? Those tariffs have to be paid up front. This is, as I put it, it's worse than a tax because a tax usually happens after the event. This happens before anything, before we sold a bottle. So even if our commander in chief says it's not a big deal, just raise your prices, if I raise the price on a container, I don't see the revenue from that container for months down the road. We have to sell it all, we have to collect it all. So where is that capital going to come from? It's a real cash flow killer. That's, that's the real challenge. And when you're a small business, cash flow is always a challenge.

[Rachel Abrams]

So bottom line is you import wine that costs money. It's already cost you money. You decided to fight this?

[Victor Schwartz]

I decided I had to step up, yes. I mean, it came to me in a sense. You know what I mean? I wasn't like I was looking for a law case. I want to be very clear about that.

[Rachel Abrams]

How did you feel when you won yesterday? Because I got to point out here, you're literally going up against the President of the United States. You presumably know how much this policy means to him and you just threw a gigantic wrench into his whole plan.

[Victor Schwartz]

I mean, when I first read the complaint Vos Elections Inc. Vs Trump et al, I laughed like a lunatic. I mean, it's in a sense like, this is so crazy. This is not what I signed up for when I created my company 39 years ago. You know, I just wanted to find interesting wines that are really delicious, find a community of like minded people on this side of the pond and sell them these delicious wines and have a happy life, you know, that's all I wanted to do and not pay high tariffs for it. I am sure there are definitely some trade issues. I'm not like completely anti tariff in some way, but the fact is it was not necessary for our industry and certainly not across the board.

[Rachel Abrams]

Do you feel any certainty now? About what to do with your business. Like, will this actually help you plant? No.

[Victor Schwartz]

Like, don't count your chickens yet. I mean, I do think we're going to eventually win. We can't know. We'll probably go to the appellate court in D.C. right? That's the next step. We don't know how they will rule. Will the Supreme Court say, no, we're not going to touch it, or will they take it on? So many ifs. You can't plan on that. You can't plan on this. No, we're planning on the tariffs being with us for a while. That's the sad truth of it. But we'll still enjoy the win for. For the time being.

[Rachel Abrams]

What bottle of wine did you pop open when you found out that you won?

[Victor Schwartz]

Well, I was already in the middle of drinking it, but I had no problem finishing the bottle. And that was a beautiful Vermentino from Chateau de Roquefort, which is in Aix en Provence. You know, a delicious wine went with my Vongolet and Linguine very nicely. My wife and I toasted and, you know, there you go.

[Rachel Abrams]

Victor, thank you so much. Enjoy whatever bottle of wine you pop open tonight.

[Victor Schwartz]

Thank you.

[Rachel Abrams]

Thank you so much for your time.

[Victor Schwartz]

Thanks. Bye. Bye.

[Rachel Abrams]

After the break, I talked to my colleague Gina Smilek about how this case could impact the President's tariff negotiations moving forward. We'll be right back.

[Gina Smilek]

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[Rachel Abrams]

Gina, welcome to the Daily. Thank you for joining us.

[N/A]

Thank you for having me.

[Rachel Abrams]

We heard from this wine importer just now who was elated by this trade ruling that came out on Wednesday night. And I'd like to take a step back here and just understand what was this case about?

[N/A]

Right, so this case was fundamentally about whether President Trump has the authority to enact across the board tariffs on on U.S. trading partners without approval from Congress. And so it was about this 10% tariff that has been applied to a range of trading partners, including the European Union, which is what I cover, and which have obviously made it a lot more expensive to import products from overseas into the United States. And so we saw the wine company, you talked to, a women's cycling apparel company, an online fishing tackle company, band together and take this to a court and say that this was an over interpretation of a pretty obscure law that had allowed these to go into effect in the first place and that it should be overturned.

[Rachel Abrams]

And remind us, Gina, what is that law?

[N/A]

Yeah, so it is this 1977 law called the International Emergency Economic Powers act, which is what we in trade circles all call ipa. And it is basically the cudgel that President Trump has been using to wage his trade war on global trading partners. It's not the only thing he uses, but this is the law that he uses to apply tariffs of varying sizes across the board on products from a range of trading partners. And so it's been really important to his strategy of kind of surprising people with big, varying, kind of shocking tariff packages. This law is a sort of unusual tool to use for something like this because it primarily concerns trade embargoes and economic sanctions. It was originally conceptualized to be in reaction to national emergencies. And the administration has basically been arguing that the trade situation is a national emergency. So this is this really unusual interpretation of this 50 year old piece of legislation and this wine importer and these other companies basically, basically take it before the court and say this is too broad.

[Rachel Abrams]

Right. And the court that ruled late Wednesday agreed with that assessment. Can you just walk me through their decision?

[N/A]

So the decision essentially said two things. It first said that a set of tariffs that the Trump administration has put on Mexico, Canada and China in response to the fentanyl trade is not a good use of this law. And it also importantly said that across the board tariffs, these tariffs that apply to everyone at 10% currently is too broad of a use of the law and that the law was not meant to give the president unbound authority to just put tariffs on whoever he wants at whatever rate he wants. And as a result, they are basically blocking these tariffs.

[Rachel Abrams]

You know, this latest news, it only feels like it's adding to this kind of whirlwind of trade news. It's really, I think, been hard for a lot of people to keep all of these different tariffs straight. So I wonder if you could just kind of help us understand the current state of play on tariffs, like what is in place, where, what's on hold.

[N/A]

Right. It is a lot to keep track of. I think it's important to emphasize what's not affected and that is sector specific tariffs. So you may remember that there are 25% tariffs on steel and aluminum and on cars. Those tariffs are under a different law entirely and are not subject to this ruling. The tariffs that are subject to this ruling are across the board tariffs that have applied to a bunch of American trading partners and which were announced early in April on what President Trump called Liberation Day. Those are currently at 10%, but they were set to bounce back to higher rates that were specific by country after a 90 day pause. So in mid July. And they've really been sort of the center of negotiations. This is the thing that Trump is negotiating with countries across the world about.

[Rachel Abrams]

Okay, so then the Wednesday night ruling, how does that ruling affect if it affects the negotiations that are active right now between the administration and these foreign trading partners?

[N/A]

Well, this really damages President Trump's ability to do the kind of negotiating that he tends to prefer to do and which he has very much been doing throughout this trade war. So what we've seen him do repeatedly is kind of art of the deal, unpredictable style of negotiation where he announces really big tariffs on trading partners and then rapidly takes them off and then threatens them again. And so it's been this sort of, you know, you get a tariff, you get a tariff approach of trying to keep everybody on their back foot. And he's been doing that unilaterally, sort of King Trump style, not passing it through Congress, not taking the time to do some big investigation. And he's been able to do it very quickly and very nimbly because of this creative use of this law. And now suddenly it seems like that might be off the table. Although I think it would be premature to say that this is the end of the trade war. I've been talking to a lot of people today who are very nervous about what happens next. I think the word of the day is probably chaos. And I think there are a lot of questions about whether there's actually potentially a risk that this actually provokes the Trump administration to do something even more drastic.

[Rachel Abrams]

And Gina, what would that look like? Like, what options does the administration have in front of it?

[N/A]

So the most obvious option that they have is try to get the ruling overturned. And we've already seen some action there. They've applied for and then been granted a stay pretty quickly after the ruling. So legally, we're now in this sort of wait and see moment where it's clear that the tariff block is not going to take effect, at least immediately. And it's very clear that the Trump administration is going to really try and get this overturned in court. And it could even end up being escalated to the Supreme Court potentially. So, clearly there are some legal options here. And then I think the second bucket of options is what they can do on the trade front. And one option there is that they could use another provision in trade law to apply some tariffs up to 15% on trading partners for 150 days. And after that, they'd have to take it to Congress. But there is a period here where the Trump administration could do that without congressional approval.

[Rachel Abrams]

And how likely is it that the president would enact that 150 day, 15% tariff and then go to Congress to seek the authority to, I guess, extend it permanently?

[N/A]

I think people think it's possible that he'll do the 150 day version of this. I think people think it's a little less likely that he's going to try to get something through Congress, because while that would put this on very solid legal footing, it also means you have to get it through Congress. But I think that there are other tools that Trump has at his disposal that he could reach for maybe a little bit more readily that he's used before and which are really legally solid. And those are the ones that people are really worried about.

[Rachel Abrams]

Can you explain that a little bit? What are these more legally solid options?

[N/A]

So there are two provisions in trade law that allow you to slap tariffs on trading partners after investigations. One is a national security investigation, and it allows you to apply tariffs to specific sectors. Sectors. The other is an investigation into unfair trading practices, and it allows you to apply tariffs to a specific trading partner, so an individual country, but across the board, these are the provisions they're currently using to hit steel and aluminum and to hit cars. And so this isn't a totally novel idea which would put tariffs on slightly stronger legal footing.

[Rachel Abrams]

So if those options could theoretically put the administration on more solid legal footing, or why not use those to begin with. Like, why even rely on this 1977 law that seems to have been relatively easily struck down, at least by this first court.

[N/A]

So the 1977 law gives you a lot more unilateral, immediate authority. It allows you to just kind of throw out a number and threaten another country with it. Whereas these investigations take time. You know, they take weeks, maybe months to complete. But what we've seen so far is that the Trump administration has really used a combination of the two. And so they have a bunch of investigations open, pending, not completed, that would potentially allow them to hit additional sectors with tariffs. And so it's entirely possible that we see more of these sector specific tariffs and fewer across the board tariffs. And those could still be very painful for America's trading partners.

[Rachel Abrams]

It feels as though there has been this pattern since President Trump took office of him levying these huge threats that end up, in one way or another, going away, either because a court strikes something down or a deal is negotiated or he walks something back. And I just wonder if this ruling on Wednesday, if in any way it puts even more pressure on President Trump to show that he means business with these trade negotiations.

[N/A]

Yeah, you know, this comes at this really crucial moment for the Trump administration because they had been trying to make 90 deals in 90 days, and they are well short of that target. And so I think this is sort of entering the ferment at this moment where we're in this really intense period of negotiation and there's a lot of pressure on the Trump administration. But I don't think it's a foregone conclusion that things are going to get worse from here. You know, I think we saw stocks rise on this decision because at least people in financial markets think that this could potentially de escalate the trade war. But I definitely heard some people voice the concern today that the Trump administration is going to feel like they need to reassert their bargaining position and that that feeling of being backed into a corner could force them to take more drastic action or could force them to speed up some of these sector specific tariffs in a way that would really hurt trading partners or in a way that would really hurt companies in some specific countries. And so I think there is this concern that you could end up with a deepening of the trade war out.

[Rachel Abrams]

Of this, which is a little ironic because on its face, it seems like this ruling would bring relief, but it sounds like it could actually prompt even more aggressive action, potentially.

[N/A]

I think that's right. And I think actually a good example of what that might look like takes place here in the European Union. So where I'm sitting, the EU has been facing a pretty hefty, hefty tariff threat from the US President Trump said last week that he was going to slap 50% tariffs on the EU to essentially force it to come to the negotiating table with this court case. It's now unclear whether he'll ultimately be able to use those across the board tariffs to try and sort of wrestle the EU into negotiating position. But even if it turns out that the original decision stands and that he cannot use the 50% tariffs, the EU is not totally out of the woods. There are still some serious risks that the Trump administration could use other tariffs to kind of force it to bow to the administration's will, including sectoral tariffs on things like pharmaceuticals, which are a major export for the eu. So essentially, the Trump administration might not be able to use this sort of preferred tool of just ratcheting up tariffs, but it might have other options in its back pocket that could be, if not equally bad, at least very bad for somewhere like the European Union. And so I think the upshot here is that this is a new chapter in the trade war, but the trade war is definitely not over.

[Rachel Abrams]

Gina, thank you so much.

[N/A]

Thank you.

[Rachel Abrams]

We'll be right back.

[N/A]

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[Carlos Prieto]

My name is Carlos Prieto, and I'm one of the people that help make the Daily. As part of our reporting on immigration, we heard from this woman crossing one of the most dangerous stretches of land on the whole planet to get to the United States. I knew that she was from Venezuela, which is where I'm also from. But what I found out is that not only was she from the same city that I grew up in, but she was also from the same neighborhood. She was describing parks and plazas and streets where I spent a lot of my childhood. She was a woman that I might have encountered at some point in my life. It made me feel an extra responsibility to find a way for our listeners to feel like they understood her and her story. What makes the Daily Special is that we try to understand every story with that level of closeness so that our listeners can really connect with the humans in the middle of a news event. If this is the kind of journalism that you like and that you care about, the best way to support it is by subscribing to the New York Times.

[Rachel Abrams]

Here's what else you need to know today. On Thursday, a federal judge blocked the Trump administration's attempt to bar international students from enrolling at Harvard. Over objections from the White House. The judge extended a restraining order that ensures such students can attend the university.

[Victor Schwartz]

Welcome.

[Rachel Abrams]

The ruling came on the same day as Harvard's annual commencement, during which its president, Alan Garber, celebrated international students in a pointed jab at President Trump, members of the class of 2025 from down.

[Victor Schwartz]

The street, across the country and around the world. Around the world, just as it should be.

[Rachel Abrams]

And the Trump administration canceled a nearly $600 million contract with the drug maker Moderna to develop a vaccine for bird flu. The move was a win for Health and Human Services head Robert F. Kennedy Jr. Who has repeatedly questioned the safety of vaccine technology. Thursday's cancellation also forfeits the US Government's right to purchase doses of a vaccine ahead of a pandemic. Today's episode was produced by Alex Stern, Olivia Natt and Jessica Chung. It was edited by Mark George and Paige Cowett, contains original music by Rowan Ni Misto and was engineered by Alyssa Moxley. Our theme music is by Jim Runberg and Ben Landsberg of Wonderly. Special thanks to Susan Beachy. That's it for the Daily I'm Rachel Abrams. See you Monday.