Waylon Wong (2:28)

The reason is that at least with how the administration is interpreting iipa, it gives the president everything he wants. From tariffs, no congressional oversight, target any country with a quick emergency declaration, rates he can change whenever into whatever he wants. You know, the everything bagel of tariff laws.

Waylon Wong (2:45)

But the problem is it might not even be a tariff law.

Phil Magness (2:49)

IEEPA does not even mention the word tariffs. And several of the justices pointed this out.

Waylon Wong (2:54)

Phil Magness is with the Independent Institute, a pro free market think tank.

Phil Magness (2:59)

President Trump is the first president in 50 years that IEEPA has existed to ever claim a tariff power under it. So we had all his predecessors. They enacted tariffs through other clauses of the law that have more rigorous restrictions and procedures you have to abide by. They're much more limited.

Waylon Wong (3:17)

If the Supreme Court rules against using IEEPA for tariffs, Trump will likely have to use more limited tariff laws instead. So let's dig into what those options are. The first Section 338 of the Tariff act of 1930.

Waylon Wong (3:31)

And hey, the word tariff's actually in this one right there in the name.

Phil Magness (3:34)

So the Tariff act of 1930 is more famously known as the Smoot Hawley Tariff.

Waylon Wong (3:39)

Oh, the Smoot Hawley Tariff. We know all about this one.

Waylon Wong (3:43)

Everyone's favorite.

Waylon Wong (3:44)

Oh, yes, you know it from Ferris Bueller's Day Off. And it is also very notorious because.

Phil Magness (3:50)

It plunged the United States much more deeply into the Great Depression. It happens right on the heel of the stock market crash.

Waylon Wong (3:58)

Yes. So understandable why Trump might not want to hang his signature economic policy on a law with Great Depression baggage.

Waylon Wong (4:05)

Yeah. Smoot Hawley also states that the President needs to find that another country is discriminating against US Commerce, though there's some legal debate about whether they need to prove that first.

Waylon Wong (4:15)

But once you get past all that, the law does allow Trump to set a tariff on that country up to 50%.

Waylon Wong (4:22)

It does seem to give him the power he wants. Just maybe not as easily as he would want it.

Phil Magness (4:26)

Exactly. It's the closest to IEPA as a backup option. And Scott Besant and several people in the administration have pretty openly hinted that they're exploring that use.

Waylon Wong (4:37)

So to sum up, Smoot Hawley, troubled past, Maybe not quite as speedy, but the likely backup pick.

Waylon Wong (4:43)

But it's not Trump's only backup option. Next up is section 122, and this comes from the Trade act of 1974.

Waylon Wong (4:51)

This law is untested, but it does appear to let the President use tariffs without needing an investigation first. So it's a quicker tool, but it.

Waylon Wong (4:59)

Can only be used for 150 days. Any longer it needs Congress's approval. And that time limit would be a big change from Trump's IEIPA tariffs. The Congressional Budget Office puts out projections assuming these tariffs will be in place for 10 years.

Phil Magness (5:13)

So it's 150 days versus 10 years. It's a very different Picture.

Waylon Wong (5:17)

Yeah. And it's limited up to 15%. Do I have that right?

Phil Magness (5:20)

Indeed, indeed. So maximum rate, 15%. And you compare that with, like, the Liberation Day schedule had rates going up as high as 50%. So this would be much more constrained.

Waylon Wong (5:33)

So that's the speedy option. Likely, no specific investigation needed, but limited time, limited size. And Waylon, I believe that puts us in, et cetera territory.

Waylon Wong (5:43)

And to help us wade through all this, etc, is Inu Manik. She's a senior fellow at the Council on Foreign Relations whose stated mission is to inform US Engagement with the world. INU tried to wait in line to watch the oral arguments at the Supreme Court in person, but it was too cold.

Stephen Basaha (5:59)

And I went back to my office and listened to them on. On the audio.

Waylon Wong (6:03)

Oh, so you did from the office. You were like, kind of cuddled up with a blanket and all that. Had some popcorn.

Stephen Basaha (6:07)

Exactly. I'd rather just be in my office where it's warm and listen there.

Waylon Wong (6:12)

So our next tariff option, section 232. This comes from the Trade Expansion act of 1962.

Stephen Basaha (6:19)

He actually already used section 232 in his first term to levy tariffs on steel and aluminum imports.

Waylon Wong (6:27)

Okay, you might have actually caught the important difference here from the other laws, steel and aluminum. This option is all about tariffs on specific goods, not countries. Trump's also used it this year to target foreign assembled cars and auto parts. And ENU says Trump's got a lot more in the pipeline.

Stephen Basaha (6:43)

So there's pharmaceuticals, semiconductors, and so it's really wide ranging.

Waylon Wong (6:48)

One restriction, though, is that it requires an investigation showing these imports are a threat to national security.

Waylon Wong (6:55)

But one thing it has in common with AIPA is Trump can set these tariffs at whatever rate and for however long he wants.

Stephen Basaha (7:02)

There's no restriction on how high the tariff can be. And this is why President Trump has threatened everywhere from 25 to 100% tariffs on a whole range of products.

Waylon Wong (7:11)

Yeah, I mean, he could go up to like, 1000% with this if he wanted to.

Neil Katiel (7:13)

Right.

Stephen Basaha (7:14)

Technically, he could. The law is very vague on that.

Waylon Wong (7:17)

Now, there is another important option that any president has when it comes to tariffs, and it is the oldest option.

Stephen Basaha (7:23)

I mean, the obvious thing would be to go to Congress.

Waylon Wong (7:26)

Right, Go to Congress. This whole debate before the Supreme Court is whether or not the President is overstepping and taking away what's supposed to be Congress power to tax and regulate foreign commerce.

Waylon Wong (7:38)

During those oral arguments last week, Justice Neil Gorsuch grilled U.S. solicitor General John Sauer.

Justice Neil Gorsuch (7:44)

What's the reason to accept the notion that Congress can hand off the power to declare war to the president?

Waylon Wong (7:50)

Well, we don't contend that.

Justice Neil Gorsuch (7:51)

Again, that would be. Well, you do. You say it's unreviewable. There's no manageable standard, nothing to be done. And now you're. I think you tell me if I'm wrong, you backed off that position. Maybe that's fair to say. Okay, all right.

Waylon Wong (8:04)

That would be thinking abdication.

Waylon Wong (8:05)

Ooh, Gorsuch is really putting the screws to the lawyer there.

Waylon Wong (8:09)

Oh, no, he had the boxing gloves on for this one. Inu says until the 30s it was Congress setting tariff rates, and even after that, presidents still often got Congress to sign off. So why not just do that?

Stephen Basaha (8:22)

Well, the reality is that maybe members of Congress don't want to put these tariffs in place. If you're looking at the views of the American public, the tariffs just aren't that popular. And so if the president wants to enact and keep his tariffs in place, he's probably going to have to do that on his own somehow and not have Congress there to support him.

Waylon Wong (8:44)

Whether these alternative tariff laws are needed will come down to the Supreme Court's decision. That could come as early as next month. This episode was produced by Julia Ritchie with engineering by Jimmy Keeley. It was fact checked by Sierra Juarez. Kate Concannon is our show's editor and the Indicator is a production of npr.

Waylon Wong (9:04)

And before we head out, have you ever considered rating us before with the subject line I guess I like economics? Here's what listener Sanomo said about the Indicator in a five star Apple Podcast review. I'm not in the bag for any econ podcast, but I love this one. 10 minutes for informed takes on relevant topics from hosts that seem to for real, love this particular kind of nerdery. It works for me. It definitely is for real. And we will take kind of nerdy as a compliment. These kind of reviews really help new listeners decide if this show is for them. Please help us by leaving a review that tells other people like you why they might like the indicator too.

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