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We head to DC. Bloomberg News Supreme Court reporter Greg Store was listening to President Trump as well. He is in the Bloomberg News bureau in the nation's capital. Greg, it's a big day. We kind of expected this outcome, but I don't know that we expected the decision today. But exactly what was the decision and the significance of it walk us through it.
So the significance is that the main the pillar of the tariffs that the president has been imposing over the last year does not give him teriff authority. The Supreme Court said it knocked out more than half of the tariffs that Donald Trump has imposed since returning to office. The Supreme Court said that statute, which gives the president certain powers during economic emergencies, does not include the tariff power, and that was sort of the fundamental dividing point that
thessending justices said, Yes, it does. Now, as the President suggested, there are other tariff authorities. He's going to try to invoke those as much as he can, but those do tend to be more cumbersome, more limited, and so we'll see just how much he's able to replace the tariffs that have been struck down.
Where does this go next? Is this ever coming back to the Supreme Court or are the next steps here really going just back to lower courts?
It's really give me the lower courts. There will be big fights over refunds. In that press conference, the President said he expects that to be litigated over a matter of years. It's not yet clear what argument the administration has against refunds for the one hundred and seventy billion dollars that have been paid in these tariffs under this law, but it sounds like they are prepared to at least
make some of them. So that will be a big fight, and then we may well have future fights over these other laws, including the one that the President said he is going to use to impose that ten percent global tariff. That's a more limited authority that is supposed to extend only for one hundred and fifty days. There may be questions about the exact parameters of what Donald Trump can do under that law.
I am curious to Greg about what the President said about foreign influence of the Supreme Court, and he said, in my opinion, the court has been swayed. What is your read on that and what is he maybe insinuating.
It's a bit of a head scratcher, you know. The President, of course has always said that these tariffs are paid by foreign countries, not by US importers. Well, the US importers have made very clear ensuing over these things, that they're the ones who are paying for them, and so that is perhaps what he's alluding to there. You know, certainly no evidence of that that I've seen in the opinion that it was anything other than their interpretation of what the law and the Constitution require.
I'm wondering, you know, this decision, the six to three decision, what kind of clarity does it give us about just how much power the executive branch has, Because of course, right after the decision, we have Trump coming out and saying, you know, floating another ten percent global tariff.
Yeah, well so kind of two halves to the answer. One half is the president is right, he has other authorities. And the Supreme Court didn't say you couldn't put in place any tariffs at all. You just can't do it using this law that the president has used so far up until now to basically impost tariffs for any reason at all that he wants. So in that sense it's narrow.
But the Court also, in a section that was joined by two Trump appointees Neil Gorsich, Amy Cony Barrett, and also the Chief Justice John Roberts, you know, talked about Congress's terrorf authority, Congress's taxing authority and said that unless a stat unless Congress has clearly handed over that power to the president, we're not just going to assume that the president can do something. There are actual limits to
what he can do. And the Court invoked some of the opinions that used to roll back to trim to knock out some of Joe Biden's initiatives. So the Court at least, you know, three Republican appointed members of the Court as well as the liberals, we're trying to send the message that hey, we are putting some real limits on what this president like all presidents can do.
Yeah, And I love that question from Emily and what you just said, Greg, because I do think about, you know what the president. You know, we've talked so much about the expansion of the executive branch and of presidential powers in this second term of a Trump white House, and it does seem like this many would say, can do just about anything. Right. We've seen a Congress that's
very quiet, a Republican led Congress. But having said that, how do you read the tea leaves on a Supreme Court that has been seen to be very sympathetic and maybe even political, some would say to President Trump specifically and his policies to make this ruling or did they not really have any choice based on it was pretty black and white in terms of the law.
Well, certainly important to emphasize, as you alluded to, that over the past year, the Supreme Court has let Donald Trump do an awful lot of things that he wanted to do, most of them only on a temporary basis, letting him fire people, letting him not spend money, letting him in immigration programs. And you know, that's still a reality that the Trump that the court is is being pretty deferential to Donald Trump in a lot of areas,
but these were totally different legal questions. As I said, the Constitution says the tariff power is congresses, and the Court was looking at this case as a separation of powers case, unlike the other ones.
That it had been dealing with.
And this is a place where from the Court's perspective, Donald Trump just went too far.
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We're going to stay with this story, and we touched on some of this, certainly from the press conference with the President there at the White House, but also with Greg and we want to get into maybe a little bit more of what we are hearing from that press conference. After that press conference, what's going on inside the White House. And for that we want to get to Bloomberg News White House correspondent Kate Sullivan, who just ran to the microphone there on the north lawn of the White House.
Kate Good to have you or you were in the room tell us a little bit about what that felt like on what is certainly got to be I think safe to say the president's got to be feeling a big defeat with what is a major policy of his second term here in the White House.
Absolutely, So, we just wrapped that press conference and we saw a very defiant Trump at the podium. You know, there's a lot to unpack from that press conference, but some of the top lines are the President is going said that he would be signing new orders to impose tariffs to replace some of these tariffs. He talked about using Section one twenty two to impose a ten percent across the board tariff. Also talked about Section three oho one,
which applies to unfair trade practices. I asked the President about whether this meant that he would now be asking Congress to take additional action when it comes to tariffs, and if he'd spoken to Leader thun about this. I thought it was really interesting. He said, I don't need to. I'm not going to do that because I don't need to. I felt like the top line from the President was We're still going to have tariffs, but they're just going to look a bit different, and I thought it was interesting.
He talked a lot about certainty. He kept repeating the worst certainty, saying that for a very long time, we were waiting to see how this decision was going to play out, what was going to happen, and we were living in sort of a limbo period. The White House was, And now at least they know what has happened. They have some certainty, and they think that that should inspire some confidence and really sort of now dictates how they're going to move.
Forward with this when Trump does move forward. There's a great piece on the Bloomberg terminal right now, the quick take about just all of Trump's legal options that he has after the Supreme Court said his tariffs are illegal. What will those look like in practice? Are the tariffs that Trump would potentially introduce under these new laws going to be as expansive of as what we had seen last year post Liberation Day.
There were several reporters in the room who were I'm to press for more specifics on what exactly this would look like, what exactly the rates would be. The President kept saying, I can do whatever I want, So we don't have those specifics yet.
We are.
You know, obviously this has just happened. The White House is still responding to this. We heard a lot of broad top lines from the President today about how he's feeling about it, what he's going to do. But there are still a lot of questions. And he was asked, for example, about the refunds, whether the administration now needs to refund all the billions of dollars in revenue that they've collected from the tariffs, and he said the court didn't.
Weigh in on that.
He sounded frustrated that they did not weigh in on that particular part, and so we still don't know. He said that would be playing out in courts, and like a lot of this, I think this is still going There's still a lot of unresolved questions, and this is still going to be playing out for quite some time.
You know, Kate, looking at Section three oh one and two thirty two. Two thirty two is national security reasons for maybe imposing tariffs. Three oh one seems to give the Section three oh one seems to give the president a lot of leeway to impose tariffs. I mean, it sounds like he still has a lot of levers that he can pull if he deems that it's important for the United States national security or otherwise.
Absolutely, I think national security.
Has been all within the laws. I guess what I would say, all within the law, all.
Within the law. Yes, the President has been talking about how tariffs are critical to national security. That's been a key part of his argument. I think we still have to see, you know, how this is going to play out, what he's going to do next. But definitely, you know, I think another part of this is is how is this going to affect the trade deals that have already
been struck. He talked about that briefly in the press briefing room today, saying that some of them are going to have to be reopen, some of them are going to have to be renegotiated, but that a lot of them can still stand. He was asked specifically about India. He said, India is the same, that will stay the same.
But I think they're are still a lot of questions about how exactly he's going to use, you know, when it comes to these particular sections that he that he laid out, how that's going to be implemented in practice.
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So we want to see what our next guest has to say about all of this. Alucinola is head of US Economic Research at Fitch Ratings. He's responsible for coverage of US economics and then includes the labor market, consumer spending, inflation, demographics, and so much more.
He joins us.
Here in studio, OLU, great to have you here with Emily and myself. What matters the most to you as someone who keeps a watch in the US economy? Is it that Supreme Court ruling and pushed back on Presidents Trump's tariffs, who he has said he's going to find other ways to do this. Or is it all the economic growth? Kind of the mixed messaging maybe to some extent on inflation a little bit hotter than we thought and growth a little bit weaker.
Yeah, thanks, thanks Karen for having me. It's good to be back. I think if you asked me this question at ten am, obviously I would have said, yeah, it's the GDP print, the inflation print, particularly the inflation print just because it was quite hot. But you know, fast forward the last couple of hours, Clearly the Supreme Court decision is very, very important. The uncertainty that he brings to the table, you can't run away from it. In as much as we thought tariff risks, tariff related risks
were receding, it's come right back. So, yes, the President has imposed the ten percent blanket. I still have to figure out if that ten percent is truly a blanket or are we going to exam pharmaceuticals? Are we going to exam oil and gas? Which sounds to me like what they will do, But I don't know at the moment. I don't think it's clear. So when we see that execut to that executive order, we will find out.
You have in your notes that you're calling today Liberation Day two point zero. Of course we had Liberation Day last year. It was a big market moving day as well. You link this though, to optimism. Are you still optimistic that this is going to be good for the US economy, particularly in light of Trump floating you know, ten percent?
Now, I do think that you know competitive, I would call this echoes of liberation Day, right, not quite seismic as Liberation Day was, and the markets are not downward ten percent of which.
We've been talking about, feels kind of telling yes, yeah, But I do think that to the extent that we have the ten percent, if the administration follows through with all of the exemptions, it's going to be fine because effectively it will be lower than what we had before.
If it's a blanket, that means collections will be slightly higher. So that is I don't think most companies have planned for that in terms of all of a sudden they have to pay more in tariffs, right, So I think that would bring some level of uncertainty. The other point is it's just for one hundred and fifty days. What are they going to replace it with. It's most likely going to be more sector focused, So your sector focus, by nature, would affect some countries a lot more than others,
So that brings a lot more on certainty. It's probably going to affect pricing decisions, capex decisions, and the likes. I don't think that's what the economy needs at the moment, because this is an economy where if the government gets out of the way, the tailwinds are actually quite strong, So you have to now think this may be a little bit negative because the economy on its own was relatively resilient.
Yeah, I want to go into that. I also just want to mention that the President did threat in fifteen to thirty percent auto tariffs. Now I'm looking at forward is up about one point two percent, and I think GM is it'll change, so it's not like it's actually up about one third of one percent. Yeah, those those tailwinds, if you will, whether it's higher tax refunds we get because of tax cuts, corporate tax cuts that could lead to spending. I mean, there's a lot of stuff that
could be very stimulative. So that brings us to that hotter inflation print, which you in your notes kind of says it's our reality check, Like we have to kind of own up that. As we've heard from the Fed or J. Powell, right, inflationary pressures are still a thing.
They are still a thing.
It could even maybe get worse, and definitely.
Could get worse. I think now with this renewed on certainty, potentially could get worse. I think there's this wedge between CPI and PC At the moment the CPI print, we got a few weeks ago two twenty a half percent, two point four percent. Lots of people jumping up and down saying, hey, clearly this inflationary. But with this reality check, inflation is stuck at three percent. That's essentially what it is.
And if you compare where we are today with have line of a year ago, it's actually accelerated.
Well, what's really kind of wild? And Mike McKee, who is breaking down the Fed minutes on Wednesday, says, you know they're going through, going through, and then you get to, like, I think the last paragraph where it said Fed officials were wary of cutting interest rates at their January meeting, but several suggesting the Central make may need to raise rates of inflation remains high. So they are already like continuing to be very vigilant when it comes to higher inflation.
You have to be, because three percent is not two percent obviously, right, and with all of the tariff noise, you still are not clear whether it would accelerate or not. So the Fed given a label market that seems to be relatively stable. Now the balance of risk has shifted, it now has to be inflation inflation inflation?
Does this make the report we got today about growth being slower than we expected, more of a blow to the economic outlook, particularly if we have the FED raising. It's a good question where growth is slowing.
I do think that if you dig deeper, it wants to go under the hood. You realize that about one hundred basis point or so one percentage point was because of a shutdown. If you add that back, you're talking about twenty a half percent growth. The economy on its own is resilient. I don't think it can take that away. And you're also going to get some payback during this quarter right when we get the GDP, so potentially growth will be slightly higher.
All right, you're not a political analyst, but I've got to throw midterms into this because I have to think as the president starts to go to different states, we've started to see some of that. He is thinking a lot about midterms and whether or not Republicans lose a lot of seats in Congress, and which would be really a vote on his White House. So, having said that, do you think that we'll shape what he does with tariffs and policies because he wants an economy, right, any
president wants an economy. Humming along whether it's midterms are obviously a presidential race.
I think that would be the rational view. And without me going further, without me going further, anything can happen between now and the midterms. Right, there will be that affordability to push with starting to see that. Hopefully, if that is really really strong, that may overwhelm the tariff noise, right and to some degree, corporations are used to the tariff noise to some degree, so hopefully there will not be a knee jerk reaction from a price standpoint going forward.
How optimistic are you about the refunds for the terroriffs?
This morning?
Before Trump spoke, the question was, oh, okay, well, how are all of who's going to get the refunds? And how smoothly is that process going to go? How are you thinking about that?
So I'm going to go from I'm not a political strategist too, I'm not a lawyer, but the reality is that corporations have suit right, they have the legal basis to ask for a refund now. Prospectively going forward, they may still pay times, but it seems to me that they have the legal basis since it's illegal, Hey give me back my money, you know, it doesn't belong to you. That's my sense.
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We've talked about the Supreme Court decision over teriffs. We've talked about the economic data, a lot of big news coming out investors. We've got to talk though about Ran because President Trump said it's considering a limited meal. Let's try it again, considering a limited military strike and or on ratcheting a pressure on the regime to come to a quick deal over its nuclear program. As the masses
military forces in the region. We just talked with our Tony Capasa about saying that he doesn't anticipate maybe anything coming this weekend and kind of put in perspective the forces that are there. But let's get an update on this story and for more, we head to Alan Ayir. He's distinguished Diplomatic Fellow at Middle East Institute, and he joins us. Alan, it's good to have you here with us.
Your view as you listen to what the President has said and what's coming from the White House, and as you watch what's going on in the region.
Well, first, Hi, Carol, High Emily. My view is it's probable we're heading for war, whether that's in a couple of days or within ten days to two weeks. In terms as the military puts it, the table is pretty much set in terms of US military assets in the region. And even though this administration hasn't given it it's rationale, it seems to be guided almost by inertial forces. So it seems to me there will be hostilities in the region soon.
And what's the clarity here on how Iran is preparing for a potential strike in a potential war.
Well, I think Iran has already accepted the fact that it's probable that there will be hostilities. Initially, President Trump seemed to be increasing the military threat and the hopes that Iran would exceed and agree to US terms, but that didn't happen. Iran sees itself as under existential threat from the US and Israel, So right now I would
assume it's preparing. And this is what satellite imagery is also showing preparing for upcoming hostilities and planning its counter attack, and it's not going to differentiate between what the US describes as a limited attack and any other type of attack. Iran has messaged that if it's attacked, it will respond aggressively.
Is I Ran right that it's under kind of an existential threat this point, Well, I think.
Each side is misperceiving the other. As I said, I think President Trump's administration thinks that the more force it shows, the more likely Iran is willing to capitulate, whereas Aaron, which sees itself as in an existential struggle with the US and Israel, sees any capitulation on its own red lines as merely an invitation to further aggression from the
United States. So we're in a very different place in the relationship than we've been for most of the long decades I've been following it, where even though neither side prefers military aggression, both sides are prepared for.
So what are the next ten to fifteen days going to look like? That's the timeline President Trump has given Iran for how they could avoid potential military action. And how optimistic are you that the two countries could avoid military action.
Could if they wanted to, I mean, if there were I mean, unfortunately, neither side has really pursued vigorous, sustained diplomacy. There's a certain inertial momentum here because there's so much distrust between the two sides that there's a type of sort of strategic path dependency. There's certainly room for negotiated settlement. President Trump's redline is he doesn't want Iran to have a nuclear weapon. That's certainly doable in terms of verification
measures restrictions on the Iranian nuclear program. But due to the total absence of mutual trust and the gathering of military forces in the region at this point, as I said, it seems overwhelmingly probable that there will be military actions. So I'm quite pessimistic that they'll be able to avoid some type of military action, and once that happens, prediction
is impossible. I don't know the target set that Iran will see to move against once If the US attacks, it could be US forces in the region, US allies in the region, Israel, And we don't know how extensive, era you initially, US strikes will be, whether they'll try to decapitate the regime and hopes of accelerating regime change or something more limited.
Ellan, what about what's happening at home in Iran? I mean, we are reporting notes of professor at John Hopkins University who says, you know, Iran may not have much reason to agree to a deal now, might be counting on the idea that a US attack will rally nationalist support for the regime at a time when it's faced pressure
internally from weeks of protests. He went on to say that there's a little the US has offered that Iran could agree to, So I do think about also there's what they're dealing with with the US, but also what they're dealing with at home in terms of protests.
Quite correct, there seemed to be at least some of the Trump administrator who hope that an aggressive attack on the Iranian regime will jumpstart some type of regime change the worlds, will result in a more pro West or user friendly regime in Iran. I don't see that happening. There's no institutions in place that could replace the power vacuum that would be left behind. Even if the Iranian institutions were successfully decimated by a US military strike, and
that's a huge if. So what Iranians are preparing to do, there's no generalization I can make. There will be possibly some rally around the flag effect and others hoping that the US finishes the job it starts and puts in some other type of regime.
Just to wrap up here, tell us what we need to be watching for just right in the near term. Here about any signals you're going to be looking for for any clarity on how Iran is preparing for a potential strike.
They're preparing. They're trying to reinforce their facilities that they think are strategically important in terms of nuclear sites, in terms of missile sites, because what Iran is banking on is the ability to respond using its missile forces, using its drone forces, using its rocket forces, both against land targets and also against targets in the Persian Gulf. Because the Persian Gulf is a very small area, very shallow,
there's a lot of US naval assets there. The Iranians traditionally, if you swarm techniques with small Iranian craft, right, So the next thing to watch for is, unfortunately it initiate hostilities.
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