Tariffs on Trial: Trump's New Trade Policy After the Supreme Court Ban

Summary

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The Rundown – “Tariffs on Trial: Trump’s New Trade Policy After the Supreme Court Ban” (March 1, 2026)

Host: Zaid Admani
Guest: Erica York, VP of Federal Tax Policy at the Tax Foundation

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Episode Overview

This episode delves into the recent seismic shifts in U.S. trade policy after the Supreme Court's ruling barring the President from using the IPA statute to impose tariffs. Host Zaid Admani and guest Erica York break down what the ruling means, explore President Trump’s new 10% (potentially 15%) tariff implemented via Section 122, assess the market and consumer impact, and examine the likely paths forward. The conversation also covers the practicalities and politics of tariff refunds and the broader macroeconomic questions about trade deficits and tariffs' effectiveness.

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Key Discussion Points & Insights

1. The Supreme Court's IPA Tariff Ruling

• Narrow but Powerful Decision
  • The February 20 Supreme Court verdict (6–3) determined the President cannot use the IPA to impose tariffs—a law never before used for such purposes ([01:13]).
  • Erica York:
    “It very simply says that this particular law the president tried to use can’t be used in this way… So those tariffs are now unlawful and have been taken down.” ([01:13])
• Major Impact:
  • About 75% of last year’s tariff revenues (around $160–$175 billion) came from IPA tariffs.
  • The ruling effectively nullifies most of Trump’s prior tariff actions ([01:59]).

2. The Refund Challenge

• Tariff Refund Process is Manageable
  • The government already refunds taxes at much larger scales (e.g., over $300 billion in income tax refunds per year), involving standardized paperwork ([03:48]).
  • The complexity of refunding tariff payments is “overblown,” but depends on how cooperative the government is ([03:48]).
  • Erica York:
    “It’s very obvious that this should be refunded and the government should make it as simple and transparent as possible.” ([04:23])
  • If cooperation falters, importers may need to litigate, as in the case of FedEx ([05:47]).

3. Trump’s New Tariffs: Section 122

• What is Section 122?
  • A rarely-invoked provision from the 1974 Trade Act, originally intended for emergency international payments crises during the gold standard era ([07:15]).
  • The new tariff is across-the-board (cannot vary by country or product) and capped at 150 days unless Congress renews it ([07:15]).
  • Legality is questionable:
    “The US does not have an international payments problem... So a lot of scrutiny already being applied to the legal justification.” ([08:41])
• Current Status and Uncertainty
  • IPA tariffs are now off (as of Feb 24), and Section 122 tariffs (10%) are active ([09:55]).
  • Erica York:
    “We’re in a place of a lot of uncertainty over these new tariffs, but they are currently being collected at a 10% rate.” ([09:43])

4. Legal Loopholes and What’s Next

• 150-Day Time Limit, Potential for Repetition?
  • York notes the administration seems to be treating Section 122 tariffs as a “bridge”—a short-term solution while they develop more permanent tariffs ([11:21], [12:22]).
  • There’s uncertainty over whether the administration might try to reimpose 122 tariffs repeatedly ([11:00]).
• Search for Permanent Tariffs: Sections 301 & 232
  • Section 301: Targets unfair trade practices, likely leading to country-specific tariffs (as in past China tariffs) ([12:32]).
  • Section 232: National security investigations, currently affecting industrial goods like steel, aluminum, and potentially semiconductors or pharmaceuticals ([13:11]).
  • Each new tariff route is more “surgical” and labor-intensive, so full restoration of the old tariff regime seems unlikely ([14:47]).
  • Erica York:
    “It’s not easy to do that for every single trading partner. So we may see a bit more surgical approach focusing on larger trade partners.” ([14:47])

5. Sector Impacts & Uncertainty

• Tech and USMCA Exemptions
  • Key sectors like semiconductors and USMCA partners have seen exemptions, but future policy remains unsettled ([16:12]).
  • Market expectations reset from the April 2025 tariff panic, but we’re “about to re-enter the period of tariff uncertainty” ([16:52]).

6. Economic and Household Impact

• Tariffs’ Direct Effects
  • Pre-ruling, the average U.S. household bore about $1,000 in tariff costs in 2025, projected to rise to $1,300 in 2026 ([19:57]).
  • Post-ruling, the 2026 burden is estimated to drop to $600–$1,000 per household, depending on new policies ([19:57]).
  • Erica York:
    “One way or another, whether it’s through prices or through this more direct reduction in income, U.S. households bear most of the burden of tariffs. Foreigners can also bear some of the burden... but most of the research... shows that that was not a major effect.” ([21:53])
  • Tariffs affect both consumer prices and business income, leading to reduced investment, hiring, or wage growth.

7. Why Not 15%? The Politics Behind the Numbers

• Stuck at 10% for Now
  • President Trump expressed desire for 15%, but existing trade agreements (Japan, UK, EU) cap tariffs at 10%. Section 122 doesn’t allow for differentiated rates ([22:51]).
  • Ongoing work to raise rates will likely shift to Section 301, with more targeted (country-specific) tariffs ([23:58]).

8. The Politics of Refunds & Household Burden

• Private vs. Public Benefit
  • Refunding corporations rather than households may mobilize political or social pressure for companies to pass those refunds to consumers ([24:41]).
  • The nature of tax law: Refunds always go to the payer, not those who bore the economic burden ([25:31]).

9. Do Tariffs Reduce the Trade Deficit?

• Tariffs Not the Solution
  • The U.S. trade deficit is a decades-old phenomenon, rooted in investment-savings imbalances and fiscal deficits—not trade policy, per York ([26:00]).
  • Erica York:
    “Tariffs are not really a tool that help fix that in a substantial way. The... main thing ... is this gap between saving and investment. And trade policy is not really a tool to do that... If you look at the data... the trade deficit went up... So tariffs are not the right tool to use here.” ([26:00]–[28:35])

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Notable Quotes & Moments

• On the Supreme Court’s Ruling:
  “Tariffs are taxes. Taxes are an Article 1 power of Congress. If Congress lets the President use this... it does so in a very clear way, not in a vague way.” – Erica York ([02:25])
• On the Refund Complexity:
  “The mess has been pretty overblown... The government overall knows how to refund overpayments of tax.” – Erica York ([03:48])
• On Section 122's Legality:
  “There is no impending currency crisis or issue... So a lot of scrutiny already being applied to the legal justification.” – Erica York ([08:41])
• On Market Reaction & Uncertainty:
  “We’re about to re-enter the period of tariff uncertainty.” – Zaid Admani ([16:52])
• On Economic Impact:
  “U.S. households bear most of the burden of tariffs... That pass through was split between consumer prices and staying at the business level.” – Erica York ([21:53])
• On Tariffs’ Efficacy:
  “If you look at the data... the trade deficit went up. So tariffs are not the right tool to use here.” – Erica York ([28:13])

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Important Segment Timestamps

• Supreme Court Ruling Explainer: [01:13]
• Tariff Refund Process: [03:48]
• Section 122 Tariffs Intro & Legal Basis: [07:15]
• Switch from IPA to Section 122: [09:55]
• Permanent Prospects: Seeking New Legal Avenues: [12:32]
• Scope and Industry Impacts: [14:47]
• Forecasting Household Burden: [19:57]
• Who Gets the Refunds and Political Fallout: [24:41]
• Trade Deficit Realities: [26:00]

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Summary

This fast-moving, information-rich episode is essential listening for anyone tracking U.S. trade and tariff policy. Erica York clarifies the legal, economic, and political consequences of the Supreme Court’s landmark ruling and the Trump administration’s rapid shift to new, less-tested tariff authorities. Markets, importers, and households now face several months of uncertainty as the political and bureaucratic machinery attempts to reimpose tariffs, likely with less breadth and more legal scrutiny. Ultimately, U.S. consumers will continue to bear much of the tariff burden—directly and indirectly—while the much-debated goal of closing the trade deficit remains stubbornly out of reach.

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Transcript

[A]

Welcome back to the Rundown Interview edition. Today we are talking to Erica York. Erica is the VP of Federal Tax Policy at the Tax foundation and an expert on tariffs. So in today's episode, I asked Erica to break down and explain the recent Supreme Court tariff ruling. We also talked about the new tariffs that President Trump put into place and what will happen to tariffs moving forward and the impact it could have on the markets and consumers. We covered a lot of ground in this conversation. So let's get into it. Erica York, welcome to the Rundown.

[B]

Thank you.

[A]

I, I, I can imagine the last few days for you have been absolutely wild with all the tariff stuff happening. So I appreciate you making the time today.

[B]

Yeah, happy to join.

[A]

Well, I want to just dive right into it. So we're here to talk tariffs. The big news, obviously, was on last Friday, February 20, the Supreme Court ruled in the 6, 3 ruling that the President can't use IPA to impose tariffs. So I'm already, I'm already like, talking like acronyms here. In the simplest terms possible. Can you explain what that means? What did the ruling actually forbid the President to do?

[B]

So it's actually pretty narrow, but it essentially says this law that President Trump tried to use to impose tariffs, the baseline tariffs, the Liberation Day tariffs, the fentanyl tariffs, some others related to India and Brazil and oil. He can't do that because this particular statute doesn't provide any president authority to impose tariffs. So it doesn't say anything about any other statute in trade law for presidential authority over tariffs. It very simply says that this particular law the president tried to use can't be used in this way. And so those tariffs are now unlawful and have been taken down.

[A]

What percentage of the tariffs that were active were the IPA tariffs?

[B]

Pretty close to 75%. So about 70 to 72% of the new revenues that had come in from, from last year were IPA tariffs. And going forward, you know, over the next decade, roughly 3/4 of the revenues that probably President Trump was counting on will, will no longer come in because IPA has been struck down.

[A]

Was this the first time a president had used IPA to impose tariffs?

[B]

That's right. IPA has been used in a number of other ways to, you know, impose sanctions for, I think, more than 60 times. It had been used by various presidents since the 70s, but never to impose any type of tariff. So this was a real stretch of what was purchased permitted under this particular statute. And the Supreme Court said very clearly, no, the statute doesn't let you impose tariffs. Tariffs are taxes. Taxes are an Article 1 power of Congress. If Congress lets the President use this, delegate this authority, it does so in a very clear way, not in a vague way. And there's no mention of tax, tariff, import duty, nothing like that in the statute. So it was really pushing it. No president had tried it before and now no President will be able to do it again.

[A]

Gotcha. So I think you mentioned it was around 75% of the tariffs that were in effect were the IPA tariffs. I keep reading estimates that it's $160 billion, $175 billion that have been collected that are just sitting at the treasury now that were illegally collected under the IA tariffs. There's now talks about kind of refunding those tariffs. I think FedEx even sued the, the federal government to, to collect their, to collect their refund. I want to first start with, like, is how much of a mess is it going to be to refund these tariffs?

[B]

So I think the mess has been pretty overblown if you think about tax refunds. Like the government overall knows how to refund overpayments of tax. It does this with the corporate income tax. It does this with individual income taxes on a much larger scale than what we're talking about here with tariffs. You know, if you look at individual income tax refunds, that's more than $300 billion each year returned to more than 100 million individual income tax filers. We're talking about smaller dollar amounts here. Something like 160 billion has been collected under IPA and we're talking about a smaller number of importers. The question is, so maybe back up a step. The Supreme Court didn't say anything about refunds and nor should they. They were not ruling on process on anything like that. They were simply ruling, does I EAPA allow tariffs? No, it doesn't. So these are unlawfully collected taxes. It's very obvious that this should be refunded and the government should make it as simple and transparent as possible. You know, on a monthly basis, there are refunds of overpayments of import duties. There's a, you know, regular process that importers go through to first declare the value of what they're importing, to estimate what their import taxes due would be, and then to make sure that that's correct when they actually finalize the payment. So this is not like a novel process, it's just on a much larger scale than normal. But the paperwork exists, right? Like any importer of record has declared the value of their imports very clearly had to pay a percentage of that Based on the IE Bill Levy, it's not like it's a mystery how much tariffs have been paid and who paid them. The question is, is the government going to be cooperative and make this a really easy process for importers to get their money back or is it going to have to be litigated? And we, we don't know the answer to that right now.

[A]

Right. I think that's the key question right now is like, if it's simple, then, and if the, if the White House cooperates, if the government cooperates, maybe the companies can get their money back within days and weeks. But now we're already seeing FedEx, like I said, sue. So then is this going to drag on for months, maybe years before the refunds are given back to the companies?

[B]

I hope not. I hope that if the Court of International Trade has to weigh in, I hope they do it in a way that says in any case possible, this should be automatically sent back to importers of record. If there are troubles, then it should be a really simple, transparent process for importers to get this back. Really hope it is not this long, drawn out process. And I hope the Trump administration does not fight on giving back unlawfully collected taxes.

[A]

Yeah. Well, now, going back to the tariffs, I think hours, maybe a day after the Supreme Court struck down the IPA tariffs, President Trump said that he was implementing a 15% tariff and that he's using section 122 of the Tariff act of 1974. Can you kind of explain what that is? Does this law have better legal footing? Is this going to get declared illegal? I mean, has this ever been used before? I'm just kind of turning it over to you. What is being used now to implement these 15% tariffs from President Trump.

[B]

So that that same afternoon of the decision, President Trump announced he would be using section 122. An executive order came out that Friday, Friday night saying that a 10% Section 122 tariff would be enforced. Saturday morning, President Trump said it'd be 15%, but so far it's being imposed at a 10% rate. This does date back to that Trade act of 1974, which is where we see a lot of these other tariff authorities that have been used, like section 232, national security tariffs, section 301, unfair trade practice tariffs. This one, though, is more untested. So it hasn't really been used in this way. It dates back to an era when the US Was still on the gold standard, when the dollar was pegged to the value of gold. And there Were fears about, you know, if too many people, if too many countries wanted to exchange their dollar for gold and we were running out of actual gold to do that, what authorities can we give the President to deal with that international payments problem, a balance of payments deficit? And so this statute permits the President to issue a proclamation that we have an international payments problem and put up a temporary across the board tariff. So it can't vary. The rate can't vary by product, the rate can't vary by country. It has to treat every country the same. And it's time limited. It can only be in effect for 150 days. If it continues beyond that, it takes an act of Congress to extend it. So there are already a lot of questions about is this lawful? Because the US Is not. The dollar is not pegged to gold anymore. The US does not have an international payments problem. There is no impending currency crisis or issue of us being able to handle the trade deficit that we have now. So a lot of scrutiny already being applied to the legal justification. But there are big questions. Would a court be willing to weigh in on what exactly is the definition of an international payments problem? So we don't know. And we also have this time frame issue. You know, could litigation even play out in the next 150 days? Probably not. So still, we're in a place of a lot of uncertainty over these new tariffs, but they are currently being collected at a 10% rate on imports that are coming in now.

[A]

So, okay, so, so these are active and are the IPA tariffs just not active anymore? So if you're an importer, you import something, those tariffs that you were paying previously, as of two weeks ago, you're not paying those anymore, right?

[B]

That's right. IPA went off and 122 went on. That, that happened midnight on like Tuesday, I think. So as of the 24th of February, it's this 10% section 122 that is on and IA is off.

[A]

And I guess the key point for what I'm taking away from this is that Even this section 122 is, is unproven legally, it still has some shaky legal grounds because like you said, it's based off of. You said what payment like, it's based off of like payment deficits instead of like trade deficits, which is, I think what the President's trying to. I think he's kind of using that as like the same thing.

[B]

Yeah, he's trying to justify the section122 use by pointing to large trade deficits, by pointing to our International investment position, you know, how much foreigners have invested in the US versus how much US has invested in foreign countries. But none, none of those are like a textbook definition of an international payments program problem. So it is quite questionable to, to use this authority.

[A]

I'm just going to throw this out there. Is it possible that once the 150 day timeline expires or the clock expires and then I, the President's like, well, 150 days again, right? Like it waits a day, 150 days gets enacted the day after. Is that a thing? I mean, or am I just kind of, is that, am I being silly?

[B]

We don't know if. Okay, It's a legitimate question, right, because we've seen President Trump, you know, push the bounds of what's allowed under other statutes like he did with ieba. So it's not out of the question that they might try to push the bounds here under section 122. Then it would be up to either Congress to say, hey, no, this is not what this authority means or the courts to say, hey, no, this is a clear abuse of authority. The way that the administration is talking about it though, like if you look at the executive order they put, they put the end date in there, they say that these tariffs are in effect through July 24, which is the 150 days. The administration, like Secretary Bessant, Ambassador Greer, they're also saying this is a bridge, this is a short term tariff to get us to the more permanent tariffs that they want to impose after. So it doesn't seem like at least now the administration wants to do multiple 122s though, you know, that could be a wild card that comes up later.

[A]

What's the, what's their method of trying to get permanent tariffs now? Like what, what, what laws are they looking at to try to establish the permanent tariffs to kind of get back to the level that they had with ipa.

[B]

There's two statutes that they're looking at and both already have tariffs in place right now. So the first would be section 301, if you remember back to the first Trump administration and the tariffs against China. Those are 301 tariffs.

[A]

Is this part of the same 1974 Trade Act?

[B]

Yes. These all date back to that same act and they're just different authorities that are allowed for different reasons.

[A]

Gotcha.

[B]

So 301 is like unfair trade practices or things that discriminate against the US and so they're likely to look into, you know, different trading practices that countries use, digital sales taxes and if countries have those that single out the United States, different subsidies, whatever, it may be something that's discriminatory against the US if you find that in the investigation, then the President can use that as the justification for imposing a country specific tariff. And then we also have section 232 national security tariffs. If the import of some type of good is found to threaten national security, then the President can impose tariffs on that import. So the steel and aluminum tariffs that we have now, the auto tariffs, copper, the investigations into pharmaceutical imports, into semiconductors, all of those are ongoing or already imposed. 232 investigations. There's a dozen of them. The administration is mulling at least half a dozen more. We could see even more announced in the coming days and weeks. So it's really going to be a patchwork of country specific or product and industry specific tariffs that they use to try to recreate what had been done with IEBA.

[A]

So it's. So it's like the 150 days from the section 122 is like the band aid. While that's in place, the 150 days they're going to be going heads down, looking through all the sections and whatnot and figure out how they can legally impose their tariffs in order to get to the levels similar to what they had with aipa.

[B]

Exactly.

[A]

Do you think that they'll get, do you think they'll get close to what they had? Because I think with AIPA they were just kind of like broad strokes, like you get 40, you get 30. Do they have to be more surgical now with these other statutes?

[B]

They do. So they're more, they're narrow and scope. You know, is it worth it to do a 301 investigation into hundreds of trade partners, especially small trade partners, to try to recreate piece by piece what was done with the baseline tariff? Probably not. They're probably going to have to focus on larger trade partners just because of like the administrative firepower it takes to do each of these investigations. And there's like a public comment period and you have to actually issue a report. So that takes a lot of administrative workload to do. It's not easy to do that for every single trading partner. So we may see a bit more surgical approach focusing on larger trade partners. And same with the industry specific tariffs. Like you, you just can't investigate every single type of import into the US so it's probably not going to get back to 100% of what was done with IPA. Maybe they get, you know, 50% of the way there, 75% of the way there. And then there's still questions too on what happens to the things that were exempt under ipa. One of the biggest exemptions has been for USMCA trade. Currently USMCA trade remains exempt under section 122. We also have like USMCA review coming up this summer. So I think that's one of the like huge question marks that we didn't even have an answer to under, under iea.

[A]

So including the MCA stuff, I mean, I remember that a lot of these tech companies were getting exemptions for some of the semiconductors and stuff they were importing. So is that all up in the air now?

[B]

Yeah, effectively it is. There. There was a section 232 investigation into semiconductors that has not been applied broadly. That's right. Now they're kind of keeping that in the back pocket. Like they have this investigation, but they did not impose broad semiconductor tariffs. No, broad consumer electronics tariffs. But we don't know right, what's going to be coming next. That's certainly one of the things that could see higher tariffs going forward.

[A]

Gotcha. Yeah. I mean what I'm taking away from this is that like we're about to like re enter the period of tariff uncertainty. Right? Like we're. And that's like the funny thing to me is that like April happened, Liberation Day happened last year. Everyone freaks out, market freaked out. I mean everything just goes crazy. There was this period of like two to three to four weeks where the President was changing his mind all the time of like changing the rates. And then we kind of hit this like period, like a lull period of everyone's like, all right, there's like tariffs, whatever. And the markets rallied and hit all time highs and everyone was okay with it. In fact, I feel like no one was really talking about tariffs until this ruling a couple of weeks ago. And now, now it's back to uncertainty. I wonder if like, are we freaking out? Is the freak out overblown again? You know what I'm saying? Like because we freaked because the freakout was overblown back in April. Is the freak out overblown again this time?

[B]

So there's like two pieces to this. There's the reaction to, you know, what President Trump announced back in April and those announcements, if they would have actually been implemented, would have been really bad. The, the tariffs that were ultimately put into effect were less than half of what was really announced back in April. So that's why like the ultimate economic effect of the tariffs we got was a lot smaller than what many feared because the tariffs were a lot smaller than what many feared. Now, I think we, we know probably what the high water mark is, right? We've seen the max of what can be done with the broad statute that President Trump used. He's not going to be able to get all the way back up to that with the statutes he has now. So, you know, we estimated that before the SCOTUS ruling, the applied tariff rate on an average basis across all US imports was 13.8%. That's probably about the highest that it could get with the section 122 tariffs at 10%. We think that applied rate is like something along 10 to 11%. So we're probably not going to get higher than that. We've seen the high water mark. Now it's just a question of how close can they keep it to that. The, the spot where there is a lot of uncertainty is what industry is going to get hit because there were exemptions for key growth areas right now, like if you look at all the computer equipment that's been coming in that has not really been hit with tariffs. So there could still be significant disruptions to specific industries. But I think the overall impact, we, we know where that kind of tops out.

[A]

And speaking of impact, I mean, I think that's a lot of questions that Americans and, you know, everyone has is like, what does this mean for me? You people listening? Like, yeah, you know, tariffs were, you know, even, even Jerome Powell, Fed Chair Jerome Powell says that tariffs are having an impact on inflation. Inflation is trending lower, but it's still not under the 2% target that they have. And one of that reason might be tariffs. With everything happening right now, like, what is the Tax foundation forecasting the impact of tariffs will be in 2026? Have you guys updated your forecast based on the recent ruling?

[B]

Yeah, we, we did a couple of updates. So we've, we've estimated what it would be at 10% and at 15%. So just to give context on the baseline in 2025, we estimated that the average tax burden from tariffs was $1,000 per household. We estimated before the Supreme Court ruling that the average burden would have been $1300 in 2026. Now, depending where the, where the section 122 tariff lands, and assuming that it expires after 150 days like it's supposed to, we estimate that per household burden will be between $600 to $700. So you can see that it's been, you know, close to cut in half depending what this rate will be but that has a big like caveat to it because something new will happen after those 150 days. So the per household burden will be somewhere probably, probably between like 700 to $1,000 when all is said and done. And the way that households experience that burden, I think is like, important to think through. There's so much focus on the inflation and consumer price angle, which is a real channel that tariffs have an impact through. Right. If an importer pays the tariff, then has to decide what its pricing strategy is and pass some of that cost on to to consumers. That's one way we pay through tariffs is higher prices. But in a lot of cases, the importer or the business can't pass that all the way through to the retail price level, has to eat some of the cost. And so that has an effect on US Household income just as much as higher prices do. If a firm has to eat the tariff cost, they may reduce investment, they may reduce hiring, they may reduce how much they pay their employees. Wages might not grow as much. And so one way or another, whether it's through prices or whether through it's like this more direct reduction in income, U.S. households bear most of the burden of tariffs. Foreigners can also bear some of the burden if they lower the prices that they're selling into the US Economy. Most of the research we've seen though shows that that was not a major effect. Something like 90 to 95% of the tariffs was passing through to the US economy. And that pass through was split between consumer prices and staying at the business level. So we know that these tariffs, they're a tax. It's pulled out of the U.S. economy. They primarily burden U.S. households income that can be through like the higher prices, the direct reductions in income or you know, less capital income, less return to shareholders. Very clearly they have a negative impact and shrink how much income we have.

[A]

I'm curious to get your take on this. Like why do you think that President Trump stuck with a 10% rate for the one was it I keep 122 section 122. Why do you think you stuck with 10 and and not just go all the way up to 15?

[B]

So I think it's probably related to these trade agreements that were made. Several of those secured a maximum 10% rate for, for various trade partners like Japan, UK, EU and going to the 15% across the board would violate all of those agreements that were just reached. So I think that's why it was announced and actually implemented at 10%. Even though President Trump has said he wants to increase it to 15%. And you've seen folks like Greer say they're working through how they can try to do that. I think the reason they're attempting to work through that is because 122 does not permit different rates for different trade partners. So, so they've really kind of backed themselves into a corner with President Trump saying he wants it at 15%, but doing that would violate all these agreements that were just reached at 10%. So I don't know whether they will ultimately increase it to the 15% or whether they'll just keep saying they're working on that and then we'll see the 301 investigations come out with, you know, country specific rates after 122 comes off.

[A]

Yeah, I mean, 150 days is a blink of an eye on all this stuff. So I'm sure they're, they're probably going to try to figure out how to do the other sections in order to get the rates that they want. And I think the one interesting thing that you said is that the, the burden that these tariffs are, the burden that the American households feel, and this is whole tariff refund stuff is going to get a little bit interesting, politically speaking. I mean, we've tried to focus on the investing side but like if American households are feeling the brunt of the tariffs, you have 160, $165 billion, whatever in, in refunds going back to the corporations. How is all that going to play out? You don't have to comment on that, but I'm just kind of thinking through like that's going to become just a storyline for the next few, next few weeks.

[B]

It's sticky. I think we'll see, I think we'll see like a lot of social or political pressure on corporations that get the refunds to somehow share those with consumers. If, if you're a business that like announced that you were hiking your prices because of tariffs and then you get a tariff refund, people won't be happy about that. And like, one of the things I've been saying is, you know, there's, it seems like in Congress and elsewhere, you know, various governors, they're saying refund this to the consumers. Well, there's no tax that we refund based on economic burden. It's always based on who legally made the payment. So the refund process should play out based on who legally made the payment. But then the question is, is there enough pressure to have importers share that with people who actually bore the burden? I Think there will be some pressure for that?

[A]

Yeah, that's going to be an interesting storyline. Last question here. You know, the whole goal of tariffs, you know, President Trump's like, key economic policy was like to use the tariffs to shrink the U.S. trade deficit. Right. And I think what, the U.S. has run a trade deficit since like the 70s, maybe the 80s.

[B]

Yeah, about 50 years. About.

[A]

Yeah, about 50 years. Right. So is this actually a problem? And do tariffs solve that problem?

[B]

So a trade deficit itself is not necessarily a problem. You can have a trade deficit for a good reason or a bad reason. In the case of the United States, one of the reasons we run a trade deficit year after year is because we have a lot of investment opportunities in our economy and we do not have enough domestic saving to fulfill that. And so we have this foreign capital inflow because the US Is a really attractive place to invest. We also have a really large government budget deficit. Right. That counts as dis saving and foreigners help fund that. So depending, you know, if these are productivity enhancing investments that these capital inflows are funding, that's good for the US Economy, that means we enjoy a higher standard of living than we otherwise would get. If it's a government budget deficit and it's wasteful spending and it's not doing anything to boost growth or productivity, that's basically just a tax increase waiting for it for the future. It's not really enhancing growth or the size of the economy. But that itself is not a problem of the trade deficit. That itself is a problem of the, that fact, federal government's budget deficit. So tariffs are not really a tool that help fix that in a substantial way. The, the main thing that you have to fix if you want to fix the trade deficit is this gap between saving and investment. And trade policy is not really a tool to do that. That's why if you like, if you listen to the Trump administration's talking of, you know, we're going to use tariffs to fix the trade deficit. And, and then you listen to economists and they say, well, that's not gonna work. You're not going to really make a big dent in the trade deficit overall at all. And then if you look at the data that came out from 2025, not a big dent in the trade deficit overall. In fact, if you look at the inflation adjusted numbers, the trade deficit went up. If you look at just trade in goods, the trade deficit went up. So tariffs are not the right tool to use here. And in fact, some of the administration's other policies, like if you look at the new tax law. That's going to increase budget deficits. That's going to require more foreign inflow to fund that higher deficit. It also included some provisions in there that make investment in the US More attractive, like full expensing of capital investment. That's also going to attract more inflow of investment. So you need to take a holistic look at saving versus investment balances, these broader macro factors, not just tariffs. If you actually want to do something about the trade deficit.

[A]

Yeah, the deficit going up was, I think, shocking to some people when they're like, oh, I thought terrorists were supposed to solve that, but then the data showed otherwise. So you're right, it's a much bigger problem. There's a lot of moving parts and pieces. Eric, I really appreciate you coming on. Learned a lot and hopefully we'll have you back on in 150 days or so to kind of break down section 301 and 230, all these different sections that are about to be part of our vernacular here in the next three or four months. I appreciate you coming on again.

[B]

Yeah, thanks for having me.

[A]

Thank you so much. Well, all right, guys, hope you enjoyed that conversation with Erica York. You know, I'm really interested to see what happens in the next 150 days after the Section 122 tariffs expire. It seems like the Trump administration will have multiple ways to bring back tariffs even though AIPA got struck down. So we'll see what happens. Let me know what you guys think. Drop a comment on Spotify and YouTube and while you're at it, consider giving us a five star rating wherever you listen to your podcast. All that engagement really does help us out and it helps other people find the show. Thank you guys so much for listening, watching and commenting. Shout out to Mike and Connor for all the work behind the scenes and we'll see you guys back here tomorrow. Close your eyes. Exhale. Feel your body relax, and let go of whatever you're carrying today.

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