B (3:11)

Thanks for having me.

A (3:12)

The same day that the Supreme Court ruled President Trump's tariffs were unconstitutional, he ordered a new global 10% tariff using a trade law from 1974. And then, of course, on Saturday, he said that he would raise them to 15%. What is that 1974 law say? And is this new way of imposing tariffs legal?

B (3:32)

Well, it's, it's probably more legal than the emergency tariffs that the court threw out. Those were clearly exceeding the presidential authority in tariffs. Congress has delegated over the years a fair bit of specific territory tariff raising authority to the President. This law that Trump is Now using, the 1974 act, specifically Section 122, is a specific congressional delegation of authority. So he's on firmer ground with this. There have been questions raised about whether the specific requirements of this law have been met. And so that's an open question and may well be the source of future litigation.

A (4:15)

Why is he on firmer ground with the 1974 act?

B (4:19)

Because the section 122 of the 74 act says the president can impose tariffs up to 15% on countries for a period of time for 150 days. So it is time limited when the United States is suffering something called a balance of payments problem or deficit. Now, that's the legal prerequisite that needs to be met. It's not clear whether it has been met, but that at least does specifically authorize the President to impose tariffs. What happened at the Supreme Court and what's been going on for the better part of a year is the president tried to impose, actually did impose tariffs under a different law, a 1977 Emergency Powers act that never mentioned tariffs. The word tariffs does not appear in that law. And the President was pushing the envelope of his authority. And the court ultimately said, no, you can't do that.

A (5:15)

But, David, why would he use a law from 1977 that doesn't mention tariffs instead of using the law from 1974 that does mention tariffs? Why didn't he do that to begin with? Why are we here now?

B (5:29)

That's an excellent question. He did it because he wanted to have as few constraints on his freedom of maneuver as possible. So he and his advisors took a very aggressive interpretation of this 1977 act, and he used that to basically claimed the right to impose any tariff of any amount on any product, any country, for any period of time, whenever he wanted to, however he wanted to. Now, that's obviously an incredibly expansive definition of presidential power. And the court rightly held that if that were actually true, you would have eviscerated the congressional power of the purse. That is quite explicitly spelled out in Article 1 of the Constitution. If you go back a year when President Trump came came into office for the second time, he had a choice of taking that very aggressive approach, which no president had ever done in the 50 year history of that emergency powers law, or following the rules that Congress had set out in various trade laws that would have allowed him to impose tariffs when specific conditions were met. That would have been a slower process, would have been more bureaucratic, would have required, in some cases, studies by the Commerce Department or investigations by the office of the U.S. trade Representative. And so you can see if you're Donald Trump, you've got sort of the express lane approach to tariffs, or you've got crawling through rush hour traffic, hitting every stoplight, mile after mile to impose tariffs. And he went with the aggressive express lane approach.

A (7:06)

Let's zoom out for a second. Trump says that the US Is making billions and trillions of dollars from tariffs. And so they are working. Is the US Making billions and trillions of dollars from them?

B (7:19)

Well, the U.S. treasury is certainly collecting hundreds of billions of dollars. The President likes to pretend that that money is coming from foreign countries in some cases, he said, or foreign companies in the slightly more sophisticated version that the Treasury Secretary Scott Besant, puts out. The fact is that the entities or the people who actually pay the tariffs are what's called the importer of record. The company like Walmart or Amazon or Dave lynch or whoever actually is the importer of record bringing that good into the United States. And that is the vast majority of times that's a US Person or company. Now, you can then have a more nuanced argument about how the burden of the tariff is ultimately divided. The importer, say Walmart may absorb some of it, they may pass on some of it to the consumer in the form of higher prices. So that's an argument that you can have an intellectually valid argument, but it's simply wrong to pretend that this money is coming into the United States from foreign entities. It just isn't.

A (8:33)

And on top of that, last week, you reported that the U.S. trade deficit, the reason Trump says we have to have tariffs, hit a record high last year, even with tariffs. Why?

B (8:44)

Well, what most mainstream economists would tell you, and this is not the view of the administration, but most mainstream economists would say tariffs don't really determine the trade balance. What determines that are macroeconomic policies, sort of the big picture, tax and spending policies in an economy. And if you look at what we're doing with our budget deficit, the federal budget deficit, we're running almost a 6% of GDP deficit. That's the sort of deficit you run during a crisis when the private sector is flat on its back and you need government to spend more than it's taking in to sort of goose the economy and get people back to work. And by running that big a deficit, in layman's language, you're basically living beyond your means. It's like you're maxing out the national credit card. And so when you do that, you're spending a lot. And when you spend more than you're saving or investing, you're sucking in goods from overseas, because that's where most of the stuff is made these days.

A (9:44)

So the Supreme Court ruling on Friday said that the president can no longer skip congressional approval when setting tariffs, but it didn't give any direction as to what happens now regarding the tariffs the US Government has already collected in the past year. We've already started to see several blue state governors basically being like, we want a refund. What are the next steps in unraveling this mess? Because Trump obviously doesn't want to give money back to anyone.

B (10:09)

No, he doesn't. And it's very interesting because I think, in a nutshell, what's gonna happen in the short run is a lot of lawsuits, a lot of petitions to the customs office, and we've already seen that start on the part of tens of thousands of American businesses saying, hey, you collected, in some cases, millions of dollars from me last year, and you did it illegally. I want that money back. And what's interesting about this is, over the course of last year, as the case was making its way to the Supreme Court, the Justice Department argued in court that, look, there was no urgency to this, because if you, the justice system, ultimately rule against us, the administration, we're going to give the money back. People get refunds. So let's everybody calm down. And then, of course, the president on Friday at his press conference at the White House said, hey, the Supreme Court didn't give us any specific instructions.

A (11:02)

This.

B (11:03)

That's on them. I guess we're going to be tied up in court for the next five years.

A (11:07)

On Friday, it seemed for a second like we got an answer to a year old question, can Trump do this? But now with these new tariffs, it feels like we're further than ever from ironing out America's place in global trade. What does all of this mean for trade between the US and the world going forward? You have already seen Asian countries that negotiated with Trump being like, hey, hang on a second, we've negotiated a tariff that's lower than what Trump says we're going to do now. Also, Trump did all of this on social media over the last couple of days. So where do we go from here?

B (11:38)

Yeah, two points. I think. The first is this social media action was, I think, kind of a last gasp of this kind of tariff authority. And the president did ultimately put out a signed executive order on this and as we said earlier, is following the law on section 122. But you know, the court action by eliminating this broad emergency powers authority has really stripped the president of, of what he loves best about terrorists. It's his answer to every question. So if there's a trade problem with a country, the answer is tariffs. If there's a national security concern, the answer is tariffs. If he just doesn't like the way somebody's talking to him, as happened in the case of the leader of the Swiss government last year, he literally said, I didn't like her tone of voice, so I gave her a 39% tariff instead of 30%. All that's gone. He's not going to be able to do that anymore. So it's going to be a much more constricted power. It's going to be slower. But he hasn't given up on tariffs. He loves tariffs. It's his singular economic obsession. So it's not going away. And what that means for businesses, what it means for the US Economy is continued uncertainty at a time when that's really the last thing we need and when it could be quite politically problematic for the president. He's now months away from leading the Republican Party into some very toughly contested congressional elections. The polls already do not look good for the Republicans. And any additional economic uncertainty weighing on businesses who would like to invest in new factories or new products, new hiring, what have you, that's going to have a chilling effect on activity going forward.

A (13:19)

David, thank you so much for joining me.

B (13:22)

Happy to.

A (13:24)

That was my conversation with David J. Lynch, global economics correspondent at the Washington Post. Will link to his book in the show notes more news. It's happening and there's nothing you can do about it. But if you like navigating the onslaught with us, please subscribe, leave a five star review on Spotify and Apple Podcasts, watch us on YouTube and share with your friends. We'll be back after some ads. This episode is sponsored by BetterHelp. Sometimes it can feel like everyone else has it all together in their love lives, whether married, dating or single. The truth is, most of us are still figuring it out and finding our way, and everyone needs a little help on their path. Therapy can help you find your direction, help you determine what you want, what feels heavy, and how you can take some pressure off yourself. BetterHelp therapists work according to a strict code of conduct and are fully licensed in the US and BetterHelp does the initial matching work for you so you can focus on your therapy goals. A short questionnaire helps identify your needs and preferences and their 12 plus years of experience and industry leading match fulfillment rate means they typically get it right the first time. If you aren't happy with your match, switch to a different therapist at any time. From their tailored recommendations, sign up and get 10% off@betterhelp.com wad that's betterhelp.com wad if you're an H Vac technician and a call comes in, Grainger knows that you need a partner that helps you find the right product fast and hassle free. And you know that when the first problem of the day is a clanking blue blower motor, there's no need to break a sweat. With Grainger's easy to use website and product details, you're confident you'll soon have everything humming right along. Call 1-800-GRAINGER clickgrainger.com or just stop by Grainger for the ones who get it done. Here's what else we're following today.

B (15:16)

Header lines.

A (15:22)

We will not bow down in the

B (15:24)

face of any of these difficulties. World powers are lining up with cowardice

A (15:28)

to force us to bow our heads.

B (15:30)

Just as you did not bow in the face of difficulties, we will not

A (15:34)

bow in the face of any of these problems. That's Iranian President Masoud Pezeshkian during an address Saturday interpreted by Al Jazeera after President Trump said Friday that he's ready to conduct limited strikes against the country. The United States and Iran are preparing to hold a third round of nuclear talks this week in Geneva. Iranian officials said last week there's a good chance for a diplomatic solution, but both sides have signaled they're prepared for war if the talks fail. For weeks, the White House has been moving military assets to the Middle east and has built up the largest US military presence in the region since 2003. The Department of Homeland Security is in the second week of a partial shutdown. The Transportation Security Administration announced the suspension of multiple airport programs but reversed course on pausing precheck. TSA announced in a statement on Sunday that the program that allows travelers to move through airport security without removing their shoes, laptops and the like would remain in place. However, the Global Entry program and airport escorts for members of Congress were suspended. That feels like a direct message. The flip flopping is a result of the partial government shutdown that began February 14th. Democrats and the White House haven't reached a deal on legislation to fund the agency, which includes tsa, Immigration and Customs Enforcement and Customs and Border Patrol. Congress was out on recess last week. Lawmakers are scheduled to return today. We'll see if that makes any difference. Tuesday marks the four year anniversary of Russia's invasion of Ukraine, with some estimates saying nearly 2 million soldiers are dead, wounded or missing between the two sides. The conflict is Europe's most devastating since World War II, and the war between Russia and Ukraine has now lasted longer than than the Soviet war against Nazi Germany. Russia attacked Ukraine on Sunday, killing at least one person in the suburbs of Kyiv and bombing infrastructure in other parts of the country. The missile strikes are part of an increased Russian bombing campaign targeting Ukraine's energy grid. The strikes have left Ukrainian civilians without electricity and heating amid harsh winter conditions. US Led peace talks took place in Geneva last week, though little if any progress was made. Former British Prime Minister Boris Johnson said over the weekend that the UK and its European allies should immediately deploy non combat troops to Ukraine to show Russian President Vladimir Putin that Western nations are serious about keeping Russia out of Ukraine. Why not do it now? There's no logical reason that I can see why we shouldn't send some peaceful ground forces there to show our support, our constitutional support for a free, independent Ukraine. One question why are we asking former British Prime Minister Boris Johnson. President Trump will deliver his State of the Union address tomorrow and the Union doesn't appear to be too happy with him right now. According to a Washington Post ABC News Ipsos poll conducted this month, Trump's approval rating is at 39%, his disapproval rating 60%. Woof. ABC News Senior political correspondent Rachel Scott says his approval ratings have not been this low since after January 6th. Yeah, that one. So when asked if Americans approve or disapprove of the way the president is handling certain topics, only 41% approving of his handling of the economy, a key issue that he ran on. And about 40% of Americans say they

B (18:53)

support the president on immigration, but the

A (18:55)

majority of Americans saying that his deportation campaign has gone too far. But the disapproval for Trump doesn't necessarily mean people are putting more trust in congressional Democrats. The poll also asked respondents who they trust to do a better job handling the country's main problems. It found that overall, 33% of Americans said Trump and 31% said Democrats 31% said neither. Not ideal and that's the news. Before we go. In a major Supreme Court case, the justices are testing how far a president can go by declaring a national emergency, with real consequences for prices, trade and executive power. Learning Resources Inc. Versus Trump is at the center of it, and Strict Scrutiny just dropped a bonus episode breaking the whole case down. And on today's episode, the latest legal news with Steve Vladek and Kate Shaw, previews of key upcoming Supreme Court cases, and a conversation with Elliot Williams about his book Five Bullets. Catch the episodes on the Strict Scrutiny YouTube channel or wherever you get your podcasts. That's all for today. If you like the show, make sure you subscribe, leave a review, reminisce about how the Olympics gave us all two weeks of curling, curling and more curling. And tell your friends to listen. And if you're into reading and not just about how seriously, I am relieved to know that I wasn't the only person to notice that curling was on every single day of the Olympics. Like me, what a Day is also a nightly newsletter. Check it out and subscribe@crooked.com subscribe I'm Jane Coston, and what a bondspiel we all got to watch. Every End was a thriller. Every vice skip played their hearts out. What a Day is a production of Crooked Media. It's recorded and mixed by Desmond Taylor. Our associate producer is Emily Foer. Our producer is Kaitlyn Plummer. Our video editor is Joseph Dutra. Our video producer is Johanna Case. We had production help today from Greg Walters and Matt Berg. Our senior producer is Erica Morrison and our senior vice president of news and politics is Adrienne Hill. Our theme music is by Kyle Murdoch and Jordan Kanter. We had help today from the Associated Press. Our production staff is proudly unionized with the Writers Guild of America East.