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- [00:02]
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Alex Osola
An appeals court temporarily allows President Trump's tariffs to remain in place plus what yesterday's ruling that voided the tariffs could mean for Trump's trade agenda.
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Legal Analyst
What's remarkable about this case is that it really ties in. Law, politics and economics are all here inextricably tied, and what the courts do is going to affect the way the markets and the way that trade policy is seen around the world.
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Alex Osola
And President Trump tells Fed Chair Jerome Powell he's making a mistake by not lowering interest rates. It's Thursday, May 29th. I'm Alex Osila for the Wall Street Journal. This is the PM edition of what's News, the top headlines and business stories that move the world today. President Trump's tariffs are to stay in place for now. In a brief order this afternoon, the U.S. court of Appeals for the Federal Circuit said it was pausing yesterday's decision from the Court of International Trade, which, as you heard in this morning's show, ruled that President Trump didn't have the authority to impose sweeping tariffs on virtually every nation until it could hear further legal arguments. The pause comes as the Trump administration scrambled in search of a stay on the ruling, saying it would take the matter to the Supreme Court before the end of the week if necessary. In a briefing at the White House this afternoon, Press Secretary Caroline Levitt said the trade court's ruling was part of a, quote, dangerous trend of judges interfering with the president's decisions.
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White House Press Secretary
These judges are threatening to undermine the credibility of the United States on the world stage. The administration has already filed an emergency motion for a stay pending appeal and an immediate administrative stay to strike down this egregious decision. But ultimately, the Supreme Court must put an end to this for the sake of our Constitution and our country.
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Alex Osola
For more on what the court ruling could mean for Trump's trade agenda, I'm joined by trade and economic policy reporter Gavin Baid. So, Gavin, which tariffs are affected by the Court of International Trade's ruling and which ones aren't?
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Gavin Baid
Basically, what we're talking about are two broad swaths of tariffs here for the Trump administration. The first is all of those so called reciprocal tariffs that he promulgated on so called Liberation Day, those were invalidated by this ruling. Right. And the second is the tariffs that were based on the fentanyl trade, on fentanyl smuggling. That was on Canada, Mexico and China. Both sets of those tariffs were promulgated under the International Emergency Economic Powers Act. And Trump said that that gave him the power to do these global tariffs. And the court said, no, it does not.
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Alex Osola
And what are the tariffs that aren't affected by this?
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Gavin Baid
So there are the so called section 232, these are national security tariffs on individual industrial sectors. So the steel and aluminum tariffs, the automotive tariffs, the tariffs that are coming down the pike on semiconductors, on lumber, on things like that. So those sector specific tariffs, that's a totally different legal authority. They were not part of this at all. They remain in effect.
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Alex Osola
Of course, trade negotiations are still going on. Right. So Canada and China have welcomed the court's ruling. The UK which was the first country to strike a deal with the US has had a more sort of wait and see approach. Why would any country negotiate with the US Right now?
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Gavin Baid
There's a couple reasons. The first is that the administration has pledged to if they can't do tariffs under this authority, they will find other authorities to impose their tariffs. The second one is that those national security tariffs, the sectoral tariffs that we talked about, are still in place. And a lot of countries would love to negotiate their way out of that as well. So there are still things to talk about here. It does undermine a little bit of the US Leverage here. And that's what the Trump administration said in their filing for the emergency stay on the court of international trade decision. They said that that decision severely undermines their negotiating position, undermines their leverage, and that's why they need an immediate stay. Then you, Kevin Hassett and others on television today saying nothing has changed, conversations continue, we're still talking to world leaders. So obviously there's a little bit of tailoring the message for the audience there. But I would say the talks are still on, but they're certainly affected by these latest court decisions.
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Alex Osola
So if the trade court ruling is upheld, would that then be the end of Trump's trade agenda? Could he use other legal ways to keep tariffs in place?
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Gavin Baid
Certainly not the end. They are actively exploring other options to keep these in place. One interesting option on the table is kind of a twofer, right? There's a section of the Trade act of 1974 called Section 122, and that actually allows you to impose up to 15% tariffs for up to 150 days on countries that have persistent balance of payment issues with the United States. Things like the trade deficit that Trump was trying to solve with all these reciprocal tariffs. Now, the Court of International Trade actually name checked that section in their opinion and basically said, you should have done this in the first place without saying that explicitly. We could see the Trump administration do that. Now, that would allow them to impose tariffs immediately without like an investigation. That's one idea under consideration. There are others as well. Expanding their use of national security tariffs. That's something they could do. They could also use what's called Section 338, which dates all the way back to 1930 and the tariff act then, and actually gives very broad tariff authority for the country to counteract unfair foreign trade practices as well. So there's a lot of different options for them to do this. They initially chose the kind of boldest, fastest and riskiest strategy. And we're seeing that that risk didn't necessarily pay off here, but there are a lot of options for them to continue.
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Alex Osola
That was Wall Street Journal reporter Gavin Baid. Thank you, Gavin.
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Gavin Baid
Thanks, Alex.
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Alex Osola
We heard how the administration plans to oppose the trade court's ruling all the way to the Supreme Court. WSJ's Jess Bravin explains what a potential Supreme Court ruling would mean.
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Legal Analyst
Even when you have lower courts that issue narrower injunctions or injunctions that apply only to the individual parties, if the Supreme Court makes a ruling on what the law requires, then all courts are going to have to follow it. And that's not in dispute on the tariff thing. Certainly we don't know how the Supreme Court would rule. But it is interesting that the Court of International Trade did cite a number of recent Supreme Court decisions that limited the Biden administration's power to do number of things like involving student debt or Covid relief and so forth. And similarly, this trade court in New York said that the Trump administration also exceeded its power under these federal statutes. So it is basically some anti regulatory precedents that came recently from the US Supreme Court are now, for now at least, restricting the Trump administration, just like they did the Biden administration before that. What's remarkable about this case is that it really ties in Law, politics and economics are all here inextricably tied. And what the courts do is going to affect the way the markets and the way that trade policy scene around the world. So it'll be fascinating to see the interrelations between these different fields of coverage.
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Alex Osola
Wall street took the latest tariff news with a grain of salt. Investors were initially enthusiastic after the trade court struck down President Trump's most sweeping tariffs. But by this afternoon, stocks had pared gains. In the end, major US Indexes closed higher. For the day. The Dow was up about 0.3%, and the S&P 500 and the Nasdaq both rose roughly 0.4%. New data from the Labor Department showed that more people newly filed for unemployment claims last week, a larger uptick than economists expected, but one that still kept the claims tally within its recent range. And revised data from the Commerce Department indicated that underlying demand in the US Economy grew two and a half percent in the first quarter, less than previously thought. Inflationary pressures were also firm. The pce, or Personal Consumption Expenditures Price Index, rose at an unrevised 3.6% annual rate, up from 2.4% in the previous quarter. Coming up, we've got the rest of the day's news, including how Meta is getting into the defense business. That's after the break.
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Alex Osola
In a meeting at the White House today, President Trump told Federal Reserve Chair Jerome Powell that he's making a mistake by not lowering interest rates. The Fed said Powell met with Trump at the president's invitation. It was their first meeting in Trump's second term. The Fed said that Powell didn't discuss his specific expectations for monetary policy. He did stress that policy decisions, such as the path of interest rates, would depend on economic data. And Tim Leisner, a disgraced former Goldman Sachs banker turned government cooperator, has been sentenced to two years in prison for his role in the looting of billions of dollars from a Malaysian sovereign wealth fund. The Wall Street Journal recently reported that, according to a person familiar with the matter, Malaysia is seeking to extradite Leisner and has since engaged with the Justice Department about its request. Meta Platforms and Anduril Industries, the defense company headed by Palmer Luckey, are teaming up to build high tech headsets for the U.S. army. The line of helmets, glasses and other wearables will carry sensors that enhance soldiers hearing and vision, helping them detect drones flying miles away or sighting hidden targets. For instance, Meta and anduril have jointly bid on an army contract for VR hardware devices worth up to about $100 million. Heather Somerville, who covers technology and national security for the Wall Street Journal, says that for Facebook and Instagram parent Meta, this could be a big move for its business.
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Heather Somerville
Should Meta with Anduril win this contract to develop virtual reality headsets for the army, it would be the most significant tie up that Meta will have had with the US military and a contract that could be potentially $100 million to build tech for the US army or would create very different and potentially significant new line of business for Meta, which, remember, was at its heart a social media company that makes its profit from online advertising. And it's really one of the most striking examples as of late of how far Silicon Valley has come in recent years in embracing national security work and being willing and enthusiastic about working for the Defense Department. This was not the case not that long ago. And for a company the size of Meta to now be getting into building hardware for the army is just a striking indication of the evolution of big tech.
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Alex Osola
And that's what's news for this Thursday afternoon. Today's show was produced by Anthony Banci and Pierre Bienname with supervising producer Michael Kosmides. I'm Alex Osola for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.