Are Trump's tariffs legal?

Summary

Podcast Summary: "Are Trump's Tariffs Legal?"

The Indicator from Planet Money
Host: Waylon Wong
Guest: Scott Horsley, NPR’s Economics Correspondent
Release Date: August 7, 2025

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Introduction: The New Wave of Tariffs

In the episode titled "Are Trump's Tariffs Legal?", Waylon Wong introduces listeners to the latest developments in President Trump's tariff policies, which took effect on August 7, 2025. Scott Horsley, NPR’s Economics Correspondent, joins as a guest to delve into the implications and legality of these tariffs.

Tariffs Overview and Economic Impact

Waylon Wong outlines the scope of the new tariffs:

• Increased Rates: Tariffs on goods from major U.S. trading partners have surged from 10% to between 15% and 25%, significantly elevating the average tax on imports to approximately 7.5 times last year's rates before Trump's administration.
• Revenue Generation: The government is currently collecting nearly $30 billion monthly from these tariffs, a figure expected to rise with the implementation of the higher rates.

Scott Horsley explains the financial burden:

“That’s going to boost the average tax on imports to the U.S. to about 7 and a half times what it was last year before Trump returned to the White House.” (00:33)

Who Bears the Cost?

The discussion shifts to the distribution of the tariff costs:

• Initial Payers: U.S. importers are first responsible for paying the tariffs. They then face the decision of whether to pass these costs onto their customers.
• Long-Term Impact: Dan Rayfield, Attorney General of Oregon, argues that American families will ultimately shoulder a significant portion of the $30 billion monthly tariff revenue.

“Tariffs are passed down to all of us, we as boomers, we as families, people that are working day in, day out to try and pay their bills don’t have the flexibility in their budget to afford it. That is a tax on all of us. Right. But it’s hidden in disguise as a tariff.” (01:30)

Legal Challenges: Are the Tariffs Legal?

The episode delves into the legal controversies surrounding Trump's tariffs:

• Court Ruling: A specialized federal trade court ruled unanimously that the emergency tariffs are illegal, citing that the authority cited by Trump does not include the power to tax imports. This ruling is currently on hold pending appeals.

Jeffrey Schwab, attorney for the challengers, states:

“It doesn't authorize tariffs at all. It doesn't say anything about tariffs. Congress can't entirely delegate its authority to tariff, which it's given under the Constitution, and the court agreed with.” (04:38)

• Administration's Defense: Brett Shumate, Assistant Attorney General, defends the tariffs by citing a severe spike in the U.S. trade deficit as a national emergency affecting military readiness and domestic manufacturing.

“The president identified a severe spike in the trading deficit over the last four years that have caused. Essentially, it's reached a tipping point, right? It's affecting our military readiness and it's affecting our domestic manufacturing capabilities. So, yes, absolutely.” (05:54)

• Judicial Skepticism: The appeals court judges questioned the definition of "emergency" and the relevance of certain tariffs to national security, illustrating the lack of clear authorization in existing laws for such measures.

Neil Katyal, attorney for the businesses challenging the tariffs, emphasizes:

“If Congress wanted to give the president power to tax imports simply by declaring an emergency, lawmakers would have said so. But they didn't.” (06:41)

Impact on Businesses and Trade Relations

Personal stories illustrate the real-world effects:

• Victor Schwartz, founder of VOS Selections, a family-owned wine business in New York, shares his struggles with the new tariffs affecting his operations across 16 countries.

“When we heard about the tariffs, we literally went through every single skew in our book, which is quite a few, and had to decide what we were going to be doing pricing wise.” (03:42)

• Economic Uncertainty: Dan Rayfield criticizes the unpredictability of the tariff implementation, highlighting its detrimental impact on small businesses and broader market stability.

“The chaotic nature of how Trump has been implementing his trade policy is just wild. There one day, gone the next, back there the next day even higher. So you have incredible uncertainty that is put into the market.” (07:55)

• Export Challenges: Oregon-based plant nurseries experience difficulties exporting to Canada due to retaliatory measures, demonstrating the broader implications for international trade relationships.

Current Legal Proceedings and Future Outlook

The legal battle over the tariffs is anticipated to reach the Supreme Court. Jeffrey Schwab remains confident in overturning the tariffs:

“We’re pretty confident that our arguments are correct and that the president's actions exceed the authority that he's been given.” (09:43)

• Financial Repercussions: If the courts rule against the tariffs, the $30 billion monthly collected would need to be refunded, posing significant fiscal implications.

Conclusion: The Road Ahead

As the episode wraps up, listeners are left with a comprehensive understanding of the complexities surrounding Trump's tariffs, their legal standing, and their multifaceted impact on the U.S. economy and international trade. The outcome of the ongoing court cases will be pivotal in determining the future trajectory of U.S. trade policies.

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Produced by: Angel Carreras
Engineering: Sina Lofredo
Fact-Checked by: Sierra Juarez
Editor: Kate Concannon
Production: The Indicator is a production of NPR.

Transcript

[NPR]

NPR.

[Waylon Wong]

This is the indicator from Planet Money. I'm Waylon Wong, and I am here today with NPR's economics correspondent, Scott Horsley. Welcome back to the show, Scott.

[Scott Horsley]

Great to be here.

[Waylon Wong]

It's always a big day when you're here. And as we've been covering, President Trump's new round of tariffs take effect today. They are on goods from many of the United States major trading partners.

[Scott Horsley]

And that means tariffs that had been set at 10% across most of the world are going to jump to 15 or 25% in some cases even higher. That's going to boost the average tax on imports to the U.S. to about 7 and a half times what it was last year before Trump returned to the White House.

[Waylon Wong]

The government is already collecting close to $30 billion a month from these tariffs, and that number could go even higher as these new higher tax rates take effect. So who's paying for that? Depends, Right?

[Scott Horsley]

Right. We've talked about how foreign suppliers could absorb some of the cost, but it's US Importers that initially have to pay the tariff and then they have to decide whether to pass some or all of that expense on to their customers.

[Waylon Wong]

Dan Rayfield is the attorney general of Oregon. He argues that eventually American families will get stuck with a big chunk of that $30 billion a month bill.

[Dan Rayfield]

Tariffs are passed down to all of us, we as boomers, we as families, people that are working day in, day out to try and pay their bills don't have the flexibility in their budget to afford it. That is a tax on all of us. Right. But it's hidden in disguise as a tariff.

[Waylon Wong]

Dan argues that the president's tariffs are not only costly but also illegal. And so far, a special federal trade court has agreed. For now, though, the government is still still collecting the import taxes while the case is on appeal.

[Scott Horsley]

Today on the show, the legal arguments for and against the president's tariffs, where the court case stands now and what happens to that $30 billion a month bill if Trump loses? We'll find out after the break.

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[Scott Horsley]

Challenge to President Trump's tariffs was brought by a group of a dozen largely blue states and by a handful of businesses that includes a small family owned wine business in New York State called VOS Selections. The founder of VOS is Victor Schwartz.

[Victor Schwartz]

I'm an unintentional plaintiff. This was not something I was looking for.

[Waylon Wong]

But tariffs have become a big expense. If Victor imports $100,000 worth of wine from Europe, for instance, he might have to pay a fifteen thousand dollar tariff before he sells his first bottle. And Victor imports wine from 16 countries around the world. Not just the usual suspects like France and Italy, but also Morocco and Croatia and Mexico. So just keeping track of all the tariffs has been a nightmare.

[Victor Schwartz]

You know, when we heard about the tariffs, we literally went through every single skew in our book, which is quite a few, and had to decide what we were going to be doing pricing wise.

[Scott Horsley]

For most of these tariffs, Trump has relied on the authority of a 1970s law that gives the president special powers in the case of an international emergency. But Fixer's lawyer Jeffrey Schwab says those special powers do not include taxing imports. In fact, the word tariff never appears in the law.

[Jeffrey Schwab]

It doesn't authorize tariffs at all. It doesn't say anything about tariffs. Congress can't entirely delegate its authority to tariff, which it's given under the Constitution, and the court agreed with.

[Waylon Wong]

US Tariff opponents won the first round two months ago. That's when a specialized trade court made up of judges appointed by Presidents Reagan, Obama and Trump himself ruled unanimously that the emergency tariffs are illegal. That ruling is on hold for now, though, while the case makes its way through the appeals process.

[Scott Horsley]

We reached out to the White House and asked what they think about the law, and deputy press Secretary Kush Desai responded with a statement saying, quote, the administration is legally and fairly using tariff powers that have been granted to the executive branch by the Constitution and Congress to level the playing field for American workers and safeguard our national security.

[Waylon Wong]

Last week, an appeals court in Washington held a hearing in the case, Assistant Attorney General Brett Shumate argued for the administration. He he says Trump's tariffs are justified by a growing US Trade deficit, which amounts to a national emergency. The hearing was actually broadcast on YouTube because the stakes are so high and there's so much interest. Now, the audio quality is not great, but here's Shumate making his case.

[Brett Shumate]

The president identified a severe spike in the trading deficit over the last four years that have caused. Essentially, it's reached a tipping point, right? It's affecting our military readiness and it's affecting our domestic manufacturing capabilities. So, yes, absolutely.

[Scott Horsley]

Many of the Judges on the 11 member appeals panel sounded skeptical as they peppered Shumate with questions. What constitutes an emergency? Are there any limits on a president's power to act in an emergency? And how does it help military readiness to slap a tax on imported coffee, which we don't grow in this country anyway?

[Waylon Wong]

Attorney Neil Katyal argued for the businesses challenging the tariffs. He said if Congress wanted to give the president power to tax imports simply by declaring an emergency, lawmakers would have said so. But they didn't. Again, YouTube quality alert here.

[Brett Shumate]

The whole idea is that tariffs and taxation are always tempting for kings and for presidents, and so that's why that power was located in Congress. And every single time Congress has departed and given that power to the president, they've done so.

[Scott Horsley]

Clearly, there are cases where Congress has specifically authorized the president to impose tariffs. Trump did so during his first term in office, taxing imported steel and aluminum and lots of goods from China. But Oregon's attorney general says whenever Congress has allowed the administration to impose tariffs like that, lawmakers have added guardrails. They haven't just given the president the kind of blanket tax authority that Trump claims to have.

[Dan Rayfield]

Congress passed safeguards for our economy, things like how long tariffs can be in place, how high the tariffs can be, and having factual findings for the implementations of the tariffs. And Trump didn't want to do that. He ignored them all, and he didn't want to follow that law. And that's why he went to this emergency power that no other president has used.

[Waylon Wong]

The tariffs that Trump has ordered are the highest in a century. They're also constantly changing, often with little or no warning. Dan says that makes it almost impossible for businesses to make plans, since they have no idea what their cost might be in a day or a week, let alone next year.

[Dan Rayfield]

The chaotic nature of how Trump has been implementing his trade policy is just wild. There one day, gone the next, back there the next day even higher. So you have incredible uncertainty that is put into the market. It's put into small businesses who are trying to lock in prices, and that impacts all of us. And what the court said, they said, hey, if you're going to do tariffs, do it the way that Congress intended you to do it.

[Scott Horsley]

Dan says the president's unpredictable trade policy has not only made it more expensive to import goods to Oregon, it's also made it harder to export. Oregon's plant nurseries, for example, usually do a brisk sales business in Canada, but that's been undermined by Canadian boycotts because our northern neighbors are so unhappy with the way Trump has treated their country.

[Waylon Wong]

They're spitting on our plants up there in Canada. Now, you might think domestic producers would benefit from Trump's high tariffs, that taxing wine from France, for example, would be great for winemakers in Oregon or California.

[Scott Horsley]

But in many cases, it hasn't worked out that way. Victor, the New York wine merchant, says tariffs have introduced a bitter taste to his whole industry.

[Victor Schwartz]

The whole wine and spirits distribution system in America is very global, and American wineries depend upon distributors that carry international products. I mean, 25, 30% of my portfolio are domestic wines. So the health of my company is very important to my domestic suppliers as it is as much to my international suppliers.

[Scott Horsley]

It's all intervined. Ultimately, the legal challenge to Trump's terrorists is likely to wind up at the Supreme Court, and Victor's attorney, Jeffrey, says their side will be ready.

[Jeffrey Schwab]

Absolutely. And we're pretty confident that our arguments are correct and that the president's actions exceed the authority that he's been given.

[Waylon Wong]

As we said, the Treasury Department is collecting about $30 billion a month in tariffs even before this week's tax increases take effect. It's all sitting in the treasury now, but if the courts ultimately side with the tariff of challengers, the government will have to give most of that money back. Scott, we have to send you back to the news desk, but we hope you come back again soon. Thank you.

[Scott Horsley]

My pleasure. This episode was produced by Angel Carreras with engineering by Sina Lofredo. It was fact checked by Sierra Juarez. Kate Concannon is the show's editor, and the indicator is a production of npr.

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