Economic Analyst / Host (2:45)
Donald Trump and his lawyers have already destroyed any possible argument they can make in court to try to defend Trump's new 15% tariffs against the world. As I'm sure you know by now, after Donald Trump lost the case before the Supreme Court and they struck down his tariffs against the world Under a 1977 statute called IPA, Donald Trump then had a temper tantrum and then imposed 15% tariffs against the entire world under the Trade act of 1974, Section 122. Now, the big problem for Trump invoking Section 122 is that it doesn't apply at all to a circumstance involving so called trade deficits, which Donald Trump is complaining about. And Donald Trump's lawyers argued before the Court of International Trade, the Federal Circuit Court as well as the United States supreme court that Section 122 of the Trade act of 1974 doesn't apply. Specifically, the federal judges and the justices then on the Supreme Court asked Donald Trump's Lawyers, does Section 122 apply instead of the statute that you've been using to impose tariffs against the world? IIPA, can you use Section 122? And Donald Trump's lawyer said, Nope, Section 122 cannot be invoked at all. That would be unlawful. So what does Donald Trump do after the IEEPA emergency tariffs against the world were struck down by the Supreme Court? He invokes section 1 22. What I also want to discuss with you in this video is that Trump has also created all of the evidence of against himself to strike down these new 15% tariffs against the world. You know how Donald Trump has made up that the United States has received trillions and trillions of dollars already in 2025, he claimed from these countries because they just want to give him all their money. Remember, he said he's collected $17 trillion, $18 trillion, $22 trillion. Well, by you making those statements, you are also demonstrating that there is not payment system controversy that would be needed to invoke Section 122 because you're saying all these countries are giving you their money and that America's never been stronger. So you have no basis to invoke Section 122 as well. Trump is going to lose yet again all of the cases that are going to be brought against him starting today based on his unlawful invocation of section 122. And one of the things I want to highlight as well as it relates to the markets, by Donald Trump invoking Section 122, he's essentially saying the United States is in a Great Depression level crisis right this second. By invoking it, he's saying he's admitting that the United States economy is worse than it's ever been before. Folks, Section 1 22, which was created in 1974 after something this big kind of Nixon financial crisis situation and the Bretton woods system, which I'll talk about in just a moment. But the statute was created in 1974 to deal with potential currency manipulation, to deal with a potential run on gold, which never ended up happening. Nixon ended up imposing tariffs for a short period of time and then certain situations were resolved back in the early 70s. But this statute has never been invoked before, ever through lot of crises that the United States have had, whether it was through the 80s, the.com bust, whether it was the Great Recession, this has never been invoked. And so by invoking it, you are also admitting that the United States basically is having a Great Depression level crisis, the scale of which has never been seen before. And that's not a good look for the United States. So let's just do what we do here on the Midas Touch Network and go point by point. Let's bring out the receipts. So Neil Kata, you know, Neil, he's been on the show before, he was the lawyer who argued the case to the Supreme Court and the lower courts that ultimately struck down Donald Trump's tariffs against the world under the IPA statute. And Katayel explains, it seems pretty hard for Donald Trump to rely on this 15% statute, section 122 of the Trade act of 1974, when his Department of Justice in our case told the court the opposite. Now, this is a direct quote from Trump's lawyers. Nor does section 122 have any obvious application here, where the concerns the President identified in declaring an emergency arise from trade deficits, which are conceptually distinct from balance of payment deficits. And Katayal explains, look, if Donald Trump wants sweeping tariffs, he should do the American thing and go to Congress. He controls both branches of Congress, Congress and the Executive branch. So pass a law if you want tariffs against the world. Persuade Congress if you think this is such a good idea as Peter Brezin explains. Section 122 of the 1974 Trade act, which I'll explain to you in just a moment, on which Trump's 10% tariff is based, does not apply in the current macro environment. A balance of payment deficit is not the same thing as a trade deficit. What Trump has been complaining of is a trade deficit with other countries. Section 122 of 1974 deals with balance of payment deficits. And I'll explain again what that means in a moment. You cannot have a balance of payment issue if you have a flexible exchange rate, as the US Currently does, or if, as Donald Trump says, he's bringing in all this money and we've never been richer, as Steve Liesman explains. I'd like to submit that declaring a balance of payments crisis to enact tariffs under section 122 is not the best look for the United States. We need to attract billions in capital daily in a payment crisis. Foreigners pull their money out, interest rates soar and currencies collapse, none of which is happening. So Trump is saying that everyone's pulling their money out of our country. That's a balance of payment crisis that you need to invoke 1970 by invoking it. He's saying money's being pulled out, but he's going on TV and saying money is being poured in. Do you get what I'm saying? He's saying we're receiving trillions. But for there to be this balance of payment crisis, it would mean that people are pulling their money out and you're having a currency collapse. And that's not what's happening. Steve Lysman explains. It's like going to the bank declaring you're broke and that you've lost your job, but that they should give you the loan anyway. And you can't have a balance of payment crisis when foreigners are supposedly investing trillions of dollars into your economy, as Donald Trump says. But consistency is never his strong suit. So if you take a look right here, this is section 122 of the 1974 Trade Act. And here's where it says you can invoke this section to do 15% tariffs against the world. It has to be blanket, basically against the world. And it could only last 100, 150 days. But you have to have these predicate situations in order to invoke it whenever fundamental international payment problems require special import measures to restrict imports. So what are the fundamental international payment problems? That doesn't exist. And by Trump's own words, there isn't one, we've never been richer. We're in the golden age. We've brought in trillions of dollars. That's what he says. So then it is to deal with large and serious United States balance of pay payments deficits to prevent imminent and significant depreciation of the dollar in foreign exchange markets, or 3, to cooperate with other countries in correcting an international balance of payment disequilibrium. And then you can do a temporary import surcharge not to exceed 15% for a period of up to 150 days. So the United States has never since 1974 experienced a balance of payment crisis severe enough to invoke Section 122 of the Trade act of 1974. Now, if you're just curious, why was this enacted? Well, it was enacted in 1974 partly in response to President Richard Nixon's 1971 imposition for a short period of time of a 10% supplemental import duty. It was called the Nixon Shock during a genuine balance of payment and Monet crisis under the fixed exchange rate Breton system that existed post World War II. So Nixon used authority from something called the Trading with the Enemy act, not section 122. And the duty aimed to protect US reserves, curb speculation against the dollar and pressure allies to revalue currencies, leading to something called the Smithsonian agreement in 1971. Imposing the 10% tariffs wasn't monetary policy. It was done very surgically for a short period of time. And it had to address this thing called a Nixon Shock. And so one of the issues that happened was the system that existed post World War II really grew with certain pressures that were developing. And a US balance of payment deficit widened with heavy military spending, funding, foreign aid programs, private US investment overseas. And as Europe and Japan recovered economically, their exports became more competitive, reducing US Trade surpluses and continuing to persistent current account deficits. This flooded the world with dollars, dollar glut, dollar overhang. While US Gold reserves remained relatively fixed, the dollar became overvalued relative to other currencies, hurting US Exports trade balance and what almost happened for a period of time is gold reserves fell sharply. There was this real risk of a run on gold where foreign holders demanding gold en masse and the US couldn't honor it because it was pegged to this gold standard. And so ultimately an agreement was reached called the Smithsonian Agreement. And actions relating to the Smithsonian Agreement marked the end or the beginning of the end to the Bretton woods fixed exchan system rather, which is different than what we have right now. And again, it really related to this unsustainable imbalance in the fixed rate system. I know that was a complicated explanation, but that doesn't exist right now. Okay, and if it did exist, a run on gold, a run where we're conceding that we are in the biggest crisis imaginable right now. Now look, this is super important. If you used Medicare.gov to get Medicare Advantage plan information, you may want to double check your plan. The provider directory had inaccurate information on it. And it's possible you signed up for a plan that doesn't actually cover your existing doctors. Listen folks, it's easy to choose the wrong Medicare plan and unfortunately, Medicare mistakes can cost you thousands of dollars. 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