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