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How would you describe this moment in the trade war.
I think we're at a big turning point.
Brendan Murray leads Bloomberg's trade coverage.
We're really at an important juncture at the moment where the question of Trump's strategy, this aggressive, I'm going to put leverage on you strategy could be called into question.
It's a strategy that's become all too predictable. Trump comes out swinging with big threats and then pulls back when markets react.
And so the question now is can he keep in a sense crying wolf like that, can he keep credibility or will countries on the other side say, you know, he's just bluffing. If we just ate this out, he will rain this back because market pressure will be too great.
We're more than halfway through the ninety day pause on Trump's sweeping reciprocal tariffs. That three month delay was supposed to the US time to negotiate trade deals with countries around the world. But besides a limited deal with the UK and a tariff truce with China that's looking increasingly shaky, there hasn't been much in the way of progress.
Now, the administration would say talks are advancing with various countries Japan, South Korea, India, Switzerland, but otherwise they keep saying this every week, that these deals are imminent and they're not here yet.
And now there's pressure coming from a different direction the courts. Last week, judges for the US International Trade Court ruled that Trump's fentanyl related tariffs on China, Mexico, and Canada, and his Liberation Day reciprocal tariffs the marquee policies of his trade war are illegal. The Trump administration is appealing and exploring other strategies to advance its agenda, but Brendan says the legal setback is just the latest sign that the US trade war isn't going according to plan.
We're at the point where the tables are sort of turning to where Trump is either going to maintain this leverage or it's going to slowly slip into the hands of his negotiating counterparties.
I'm Sarah Holder, and this is the big take from Bloomberg News Today. On the show, Trump's trade war and his credibility face their biggest challenges yet. I speak with Brendan Murray to get the latest on tariff negotiations, and with Bloomberg's Eric Larsen to dive deeper into the Trade Court's ruling and what comes next. The Trump administration may have suffered a setback when its reciprocal tariffs were deemed illegal last week, but that didn't stop the president from
announcing a new tariff hike days later. Standing before a crowd of US steel workers near Pittsburgh on Friday, he said he'd double existing tariffs on steel and aluminum from twenty five percent to fifty percent. I asked Bloomberg's Brendan Murray about the motivations behind the move.
Trump said that he hiked these steel and aluminum tariffs because he wants to protect this industry as important for national security. If America doesn't have its own steel makers, its own aluminum smelters, then we're reliant on a lot of other producers, including China. There's a distinction to be made in the authorities that he used for both the reciprocal tariffs that's the universal ten percent tariff on most trading partners and the twenty five and now fifty percent
tariff on steel and aluminum. One is he used an authority that's rarely been used. This is the authority that the court struck down the other law. The authority that he used was called Section two thirty two. It's been done before, it's kind of legally established. It's a pretty ironclad tariff that you can put on steel and aluminum because of national security reasons. So the president suffered this
setback in court. A couple days later, he'd reminded the world that these two thirty two tariffs on steel and aluminum that he still has a lot of power over setting tariff levels, and we saw him double those to fifty percent.
Well, Trump made the announcement about the steel and aluminum tariff hikes at the US Steel plant. What kind of reaction did Trump get from the crowd, wells, it.
Was like a campaign event. The banner behind the stage was the Golden Age, referring to sort of the golden age of America that he wants to restore. So it was a pretty receptive crowd. And of course, you know, the steel industry lobby couldn't be happier about the result. It may help the profits of steel companies. It may protect production lines in states like Pennsylvania and Ohio where steel is produced but it's also going to hurt a
lot of users of steel, the buyers of steel. These are the companies that make washing machines and cars and construct homes exactly. Construction companies are, you know, among the biggest complainers of this that is only going to anger countries at exports steel, Korea, Japan, the European Union, the UK. The UK did this supposed deal with the administration. What
happens to their steel exports. So there's a lot of questions and it just keeps getting the web keeps getting more tangled every single day.
What other major trade negotiations were playing out in the background this weekend? Were there any other major updates on the tariffront.
Well, there's a number of countries that have these ongoing talks, and it's sort of shuttle diplomacy, flying into Washington for a couple of days, flying back to their capitals. The Japanese are in at least round number four of talks. The South Koreans are also pretty well advanced into their discussions. Switzerland not an EU country, so it's got to negotiate its own deal with the US is apparently getting pretty
close to a deal as well. India has long been said to be among the front runners to get a deal before the July ninth deadline. But interestingly, we saw right after that court ruling, India sort of step back and go, well, wait a second, now, maybe maybe the president doesn't have as much leverage over US as he used to. If this reciprocal tariff is going to be
proven illegal. They drew another line in the sand that said we we no longer think that the ten percent reciprocal tariff on US is acceptable and that has to come off if we're going to keep talking. So what we've seen is, you know, a lead up to about now when the president feels like he's got a lot of leverage, but it looks and the experts that we talk to say that leverage is slowly slipping away. Time
is really ticking against the president. You know, he came to office as the you know, the deal making president, and if he can't deliver on those or he has to issue another ninety day delay, you know that credibility will be eroded.
And what about China. China accuse the US of violating it's trade truce just today. Can you say more about how China US relationship are being strained right now.
On Friday, when Trump said that China wasn't living up to ince end to the bargain, he said something to the effect of no more mister nice guy the end of his social media post. China has a fairly long standing policy of not responding to threats, intimidation, bullying, and they're not driven to the negotiating table out of fear, or at least that's the perception that the Chinese government wants to portray. So what we saw was the Chinese Commerce Ministry today saying this is not the kind of
environment that's helpful for talks to progress. President Trump really wants to have a phone call with President she and that will help spark negotiations and get things back on track. And the Chinese officials who we report on say, we're not going to sit down at the negotiating table if you're telling us no more mister nice guy. That's essentially the message that we heard out of Beijing.
Coming up, I sit down with US legal reporter Eric Larson to ask how significant was the Trade Court's ruling that deemed many of Trump's tariffs illegal and how will that ruling impact the flu of trade negotiations the administration is trying to rush through. Eric Larson, legal reporter for Bloomberg, thank you so much for being here.
Yeah, thanks for having me.
Eric. We saw the biggest challenge yet to Trump's trade policies come last week from the courts. Walk us through the lawsuits that led us to this consequential ruling in the US Court of International Trade. When they were mounted and who was behind them? Sure?
So the tariffs were issued starting in February, and then of course the big Liberation Day tariffs Global tariffs in early April. And so around April twenty third, a group of a dozen Democratic led states filed one of the biggest lawsuits challenging them, filing in the Court of Internet National Trade, and another group another lawsuit filed by a
group of small businesses, filed a very similar lawsuit. Those cases ended up being consolidated, and the Court of International Trade issued this ruling on May twenty eighth, finding that the tariffs were in fact illegal and granting what's known as a summary judgment against the tariffs without even holding a trial. Determined that the facts were very straightforward and no trial was necessary.
What were the central arguments the plaintiffs were making these states and these small businesses, why did they think these tariffs were illegal?
Sure, so the way that Trump rolled out these tariffs was pretty unprecedented. He used an emergency law passed in nineteen seventy seven that grants a president authority over different kinds of financial transactions if a national emergency has been declared. So what Trump did was declare a series of national emergencies and then used this law to issue sweeping tariffs against most countries in the world that we do business with.
Trump decided that the trade imbalance that we have with a lot of countries are trade deficits, constituted a national emergency. And the States and the groups that sued said, that's not what the law is used for. Only Congress has control over this level of tariffs and taxes. That's in the constitution, and so they said it was illegal.
So that law that Trump used, the International Emergency Economic Powers Act called AIPA of a trade experts, what was it created for and what has it been used for in the past.
Well, it's typically been used for sanctions if there were a national emergencies, say with a specific country like Iran, or a shortage of some sort of products that the government decided constituted an emergency. And you know, I looked into when it had been used before, and they were incidents I never heard of. It's very under the radar.
So the judges sided with the plaintiffs said that using AYEPA in this way was not legal. But the administration quickly appealed and a federal appeals court temporarily reinstated the tariffs. For now, where do we stand with tariffs while this case is working its way through the appeals process and what's next?
Sure, so the tariffs are currently in effect because of that stay that was issued by the Court of Appeals for the Federal Circuit in Washington, and it was a very brief pause. It's an administrative stay. It's called while the appeals court considers a longer lasting stay pending appeal, which would essentially block the Trade Court's ruling until the litigation is resolved. So a pretty long lasting ruling. We
don't have that yet. So what we're waiting for is for the appeals court to rule on that motion for a stay pending appeal. And it's pretty consequential because the fact that the court granted this administrative stay just to keep the status quo in place. While it considers this longer lasting stay, you can't read too much into it. So there is the possibility that this appeals court could deny the stay pending appeal, in which case the tariffs would go back into effect.
It's interesting because we've seen Trump and Trump administration officials like Peter Navarro kind of played down the importance of this case and this ruling publicly, while also trying very hard to get an appeal and saying we needed to use these powers to enforce our trade policies. What struck you about the response so far?
It showed a little bit of there were two sides
of things. That there was what they were saying in the court filings and then what they were saying in public the court filings, they couldn't have been more clear that they considered this ruling by the Trade Court to be a massive threat to national security, a threat to the president's authority to carry out negotiations with foreign countries, saying that undermined President Trump's ability to negotiate all these tariff deals and trade deals that of course we've been
watching the government conduct. That's why they were arguing for this stay pending appeal that I mentioned earlier that we still are waiting for. They're saying that they need it because of how urgent it is, and then of course in public they're talking about all the other ways they can issue tariffs, and so maybe it's not that big of a deal and they're moving forward with the tariffs.
Well, So, in your assessment, the assessment of your legal sources trade experts, how big of a blow would a loss on this this court case be for the Trump administration and for its tariff policies.
I think it would be a historic loss for the Trump administration if ultimately the Supreme Court upholds the Trade Court's decision, because it would represent a big swing by Trump's administration being shot down by the highest court in the land, which he has a six' three conservative, Majority and if they ultimately came down and, said, yes you exceeded your, AUTHORITY i think it would probably be seen
as one of the biggest setbacks of his. Administration And i've also spoken with folks including The Oregon Attorney, general have made this argument that does The Supreme court wants to set this precedent WHERE aipa can be used by a president in this way because they argue the next president could be A. Democrat and you, know, hypothetically just throwing this out, there what if they declared gun violence in the country to be a national emergency and decided
to therefore issue one thousand percent tariffs on all weapons imports and ammunition and everything. Else that would be pretty damning for The republicans to have that situation hanging out.
There and if The Supreme court does rule Against, trump it could reshape his trade policy and use of tariffs going. FORWARD i Asked Bloomberg's Brendan murray about how the administration might. ADAPT i doubt.
It's going to diminish his impulse to put tariffs on imports to accomplish what he wants to. Accomplish he has a number of other authorities that he can. Use can we talked about the two thirty. Two he's got something Called section three zero, one which is kind of put on industries that are operating unfairly in trading with THE.
Us and there's another, authority a sort of obscure. Authority the number is one twenty two and it could be brought in for one hundred and fifty days and the president could put fifteen percent tariffs on anybody's imports if he wants. To, now that's only going to last for one hundred and fifty, days but it could still sort of extend the policy of protectionism that the president wants
to deploy out into the. Future so a lot of trade lawyers would say that was no surprise That trump tried at praierly obscure untested legal authority and has at least lost for. Now but there are others that he can. Use they're more, targeted they take longer to, implement there's investigations you have to do to kind of justify while you're putting tariffs on whatever's coming, next semiconductors or, timber you,
know other. Things so it was definitely a, setback one that some people in the administration probably didn't, expect and they are now pivoting to this what do we do? Now what about these other? Authorities can we use? Those and we'll see in the days ahead whether they try to deploy.
Those what about how this court case is impacting international trade? Negotiations how does it impact THE us government's negotiating power when it's talking to countries Like, China, India European union members right, Now, well.
It's ultimately going to slow all these talks. Down if you're sitting on the other side of the table from a counter party that has its main threat over you is being challenged in court and it could be days when court could strike those down and they could no longer use those with, you then your strategy is to
delay and to run out the clock on. This and so you would probably see countries try to drag this out as much as they, can at least until there's some clarity in the court case and ultimately or five weeks away From july, ninth and there's still no really no deals, done and so it's going to come down to the wire as to whether they can get any meaningful deals.
Done this is The Big take From Bloomberg. News I'm Sarah. Holder to get more From The Big take and unlimited access to all Of bloomberg dot, com subscribe today At bloomberg dot Com slash podcast. Offer if you liked this, episode make sure to follow and Review The Big take wherever you listen to. Podcasts it helps people find the. Show thanks for. Listening we'll be back. Tomorrow