The Trade Guys – Episode Summary

Podcast: The Trade Guys
Host: CSIS (Center for Strategic and International Studies)
Episode: Tariffs at the Supreme Court, a CS3D Update, and Nvidia Chips to the UAE
Date: November 11, 2025
Hosts/Speakers: Phil Luck, Bill Reinsch (Scott Miller out this week)

Overview of Episode Theme

This episode analyzes three major topics affecting global trade and policy:

1. The oral arguments before the Supreme Court concerning the President’s authority to impose IPA (International Powers Act) tariffs.
2. The current status and political struggle over the European Union’s Corporate Sustainability Due Diligence Directive (CS3D).
3. The implications of the US decision to grant an export license for Nvidia AI chips to the UAE.

The conversation blends legal, economic, and policy perspectives, providing in-depth context, history, and predictions for evolving trade landscapes.

1. Supreme Court Review: IPA Tariffs

What’s at Stake (00:56)

• The core issue: “The President’s ability to impose what turns out to be billions of dollars worth of tariffs on basically any partner with really quite a bit of latitude so far.” — Phil Luck
• Recent oral arguments revisited the powers given to the executive branch vs. Congress in setting tariffs, especially under the IPA and related statutes.

Legal Analysis of Oral Arguments (01:57)

• Bill Reinsch's Prediction:
  “My prediction on outcome is Groundhog Day. Basically, we're going to see the same thing repeated over and over again. Lawsuits, he loses, he does it again. Another lawsuit, he loses again, he does it again. Plan B, plan C, plan D.”
  (03:10)
• Justices from all ideological backgrounds challenged both sides, making it difficult to predict the outcome.
• Key legal issues discussed:
  • Delegation Doctrine: Does Congress have the right to delegate broad tariff powers to the President?
  • Major Questions Doctrine (raised by Chief Justice Roberts): Does the President need clearer congressional guidance to act on tariffs, given their significant economic and political impacts?
  • Foreign Policy vs. Economic Policy: Should more latitude be given to the President in foreign policy, as some justices (notably Kavanaugh) suggested?

Tax or Regulation? The Semantics (04:55)

• Dispute over whether tariff-setting is taxing authority (reserved for Congress) or regulation (potentially under executive purview).
• “I think some of them very clearly thought a tariff is a tax and Congress has taxing authority, uniquely, the executive does not.” — Bill Reinsch (05:47)

The Revenue Debate and Practical Challenges (06:24)

• The administration argued revenue from tariffs is “incidental”—met with skepticism due to the magnitude (about $90 billion).
• Justice Barrett raised concerns about how tariff-payers might get refunds if the court overturned the tariffs, which Bill dismissed as procedurally complex but legally straightforward.

Procedural Outlook and Predictions (08:05)

• Bill foresees a close decision, likely “five to four, six to three against the president,” with swing justices (Barrett, Roberts, Gorsuch) in play.
• “They're essentially going to have to say that when Biden did it was bad, but when Trump did it, it was good.” — Bill Reinsch (08:13)
• Phil echoes the uncertainty but flags the broader, lasting impact on presidential authority.

Legal Process and Future Workarounds (11:57)

• Even with a defeat, the administration could attempt other statutory justifications (e.g., Section 232—national security), but with additional procedural hurdles and narrower scope.
• Example: Steel and aluminum tariffs on “derivatives” like knitting needles—highlighting the sometimes-absurd breadth of what can be labeled a security threat.

Historical Perspective (14:46)

• Bill adds firsthand context:
  “I am so old that I actually was in Congress and worked on this peripherally, because it came up like two months after Senator Hines took office...the idea was to constrain the President, not to give him unfettered authority.” (14:46)

Notable Moments & Quotes

• “If your plan is to assassinate somebody, stabbing them with a knitting needle actually could do the job... But on its face, it sounds silly.” — Bill Reinsch (12:52)
• “If you can bring it on a plane, it doesn't cause a national security risk.” — Phil Luck, joking about knitting needles (15:49)

2. EU Corporate Sustainability Due Diligence Directive (CS3D) Update

Background & Political Tensions (16:25)

• CS3D aims to require larger (and initially medium and small) companies to audit and remedy human rights, labor, and environmental abuses in their supply chains, or face stiff fines.
• “Nothing is simple in the European Union.” — Bill Reinsch
• After heavy lobbying from both business and political sides, recent efforts in Parliament have narrowed its scope and delayed implementation.
• Only companies with more than 5,000 employees now expected to comply under amendments.

The EU “Brussels Effect” and Regulatory Ambitions (22:16)

• Phil emphasizes the EU’s global leadership/first-mover strategy in regulation, citing previous successes, but acknowledging growing doubts about effectiveness as costs mount.
• Bill notes growing opposition, even from central figures like French President Macron and German Chancellor Meirz.

Cost vs. Principle and Diminishing Enthusiasm (23:38–24:58)

• The EU’s regulatory ambitions risk burdening its industries and undercutting competitiveness, especially as the tangible costs of compliance become clearer.
• “Support tends to decline as the point of compliance gets closer.” — Bill Reinsch (23:59)
• Example: CBAM (EU’s carbon tariff system) initially popular, but support waned as actual reporting and payments loomed.

Editorial Insights

• Both hosts agree on the admirable goals (combatting forced labor, climate impact), but question the economic costs and competitiveness tradeoffs, especially when other trade blocs are not following suit.

Notable Quotes

• “The net effect, I think in the minds of the companies is this is really a distraction from what we're supposed to do, which is to make products or provide services, hire people, create jobs and economic growth. And this is going to retard all of that.” — Bill Reinsch (21:40)
• “It puts them in a tricky spot.” — Phil Luck, on EU industry (25:19)

3. US Export Controls: Nvidia AI Chips to the UAE

The Decision and Its Context (26:45)

• Microsoft was approved to export thousands of Nvidia AI chips to the UAE, in partnership with G42.
• Bill’s take: “Good policy. But I would not have started with the UAE.” (28:07)

Balancing Act: Over-Control vs. Under-Control (26:49)

• The US is attempting to balance protecting sensitive tech while not stifling its own industry’s competitiveness.
• “The way for the US to maintain AI leadership globally is to flood the zone, get everybody to buy our products, make the American AI tech stack the global standard, and basically outrun and outmaneuver the Chinese.” — Bill Reinsch (27:23, paraphrasing David Sacks)

UAE as a Risky Partner (27:58)

• Concerns over “leakage” (chips passed on to China or Russia) due to the UAE’s record and status as a major international transit hub.
• Bill suggests NATO allies would have been a safer first customer for high-tech exports.

Policy Consistency and Congressional Response (30:04)

• This move stirs worries among “China hawks” and “decouplers” in Congress, anxious about advanced chips finding their way to China via third countries.
• “There’s some rumbling inside the administration because...decouplers...are certainly grumbling in Congress about this.” — Bill Reinsch (30:13)

Memorable Moment

• “The UAE is a transit hub. Right? They're an enormous transit hub for trade. That's essentially a big part of their business model.” — Phil Luck (29:07)

Timestamps for Key Segments

• 00:56 — Setting up the Supreme Court tariff case
• 03:10 — Bill’s “Groundhog Day” legal scenario
• 05:47 — Tax vs. Regulation debate
• 08:05 — Likely court split and major questions doctrine
• 11:57 — Alternate statutory options if IPA is struck down
• 14:46 — Personal history and original legislative intent of IPA
• 16:25 — CS3D explainer and political dynamics in the EU
• 22:16 — The “Brussels effect” in global regulation
• 23:59 — Declining support as regulation becomes reality
• 26:45 — Background on Nvidia chips export approval
• 27:23 — “Flood the zone” strategy vs. export controls
• 29:07 — The UAE as a transit hub and risk assessment
• 30:04 — Political blowback in the US

Conclusion

The episode provides a thorough, multi-faceted look at ongoing debates in international trade law, regulatory policy, and technology exports. Listeners gain a nuanced understanding of:

• The fragility and political complexity of executive tariff powers in the US,
• The challenging balance between principle-driven regulation and economic competitiveness in the EU,
• The dilemmas and risks facing US strategic tech exports, especially regarding potential “leakage” to adversaries.

The tone is engaging, sometimes sardonic, always informed—and rich with historical perspective and on-the-ground anecdotes.

Notable Quotes

• “My prediction on outcome is Groundhog Day....Lawsuits, he loses, he does it again. Another lawsuit, he loses again, he does it again.” — Bill Reinsch (03:10)
• “I think they're going to go against the president.” — Phil Luck (08:30)
• “The net effect...is this is really a distraction from what we're supposed to do, which is to make products or provide services, hire people, create jobs and economic growth.” — Bill Reinsch (21:40)
• “The way for the US to maintain AI leadership globally is to flood the zone...make the American AI tech stack the global standard...” — Bill Reinsch (27:23, paraphrasing David Sacks)

For more content, visit csis.org/podcasts.