This is Bloomberg Law with June Grosseo from Bloomberg Radio. President Donald Trump has taken executive action to threaten or impose new tariffs on imports from Canada, Mexico, and China, rattling stock markets and supply chains in the process of the tariff whiplash. On Saturday, Trump declared a national emergency under the International Emergency Economic Powers Act, saying the tariffs are necessary to deal with the threat from fentanyl and illegal immigration at the borders.
And in one case, they're sending massive amounts of fentanyl, killing hundreds of thousands of people a year with the fentanyl, and in the other two cases, they're making it possible for this poison to get in.
But Canadian Prime Minister Justin Trudeau disputed Trump's contentions.
Let me reiterate it. Our border is safe and secure, and less than one percent of fentanyl and illegal crossings into the United States come from Canada. We're committed to keeping it that way by addressing current challenges and strengthening our capacity.
It's the first time a president has ever used the nineteen seventy seven law to impose tariffs, although other presidents have used it to implement embargoes and sanctions. So far, Trump has implemented ten percent levies on China, delayed plans to hit Mexico and Canada with a twenty five percent duty tax, and suggested that he's coming for the European Union next. My guest is Timothy Brightbill, a partner at Riley Wine and co chair of the firm's international trade practice.
This is a novel use of AIPA. Tell us about what Trump did.
The executive orders cited the International Emergency Economic Powers Act, which does give broad authority to the president to claire and international emergency and then to take whatever action is necessary to address that emergency. AIPA authorizes the president to regulate imports when the president declarees a national emergency, and it's most often used to impose economic sanctions on foreign actors.
So when the President cited the illegal immigration at the border and the situation with respect to Sentinel, he was couching the emergency in those terms.
So does there have to be a causal connection between the emergency and the tariffs? I mean, do the tariffs have to be targeted to combat the emergency?
The courts have generally deferred to the president's ability to declare an emergency and to respond accordingly. So it's a bit unclear, and this is someone untested waters. But we saw during the first administration the president's declaration of imports of steel and aluminum under a different law, section two thirty two, were a threat to US national security, and the courts that reviewed that decision largely upheld it.
Why didn't he use that law this time?
Well, for one thing, Section two thirty two, which was the basis for the steel and aluminum tariffs, requires an investigation by the Commerce Department, also in close coordination with the Defense Department, and in the first Trump administration that took almost a year before the investigation was completed and
the tariffs announced. Similarly, Section three ZHO one of the Trade Laws, which was the basis for the tariffs on China of twenty five percent on hundreds of billions of dollars worth of goods, also requires a lengthy investigation by the US Trade Representative's office. So the use of AEPA was to allow the President to act very quickly and without an investigation by the Commerce Department, the US Trade Representative, or any other US government agency.
I mean, it seems like. In this case, as with many of his other executive orders, president Trump is trying to jump start his agenda by using the law in novel ways.
Yes, I think this administration came in very prepared to test all the various legal tools in the toolbox, and in fact, there may be more than a half a dozen different trade related laws that the administration might use during the next four years. Of those, AIPA is one of the two laws that can allow the president to
take almost immediate action. The other is there's another provision called Section one twenty two of the Trade Act, which relates to Balance of Payments Authority, and that also would allow the president emergency powers to address large and serious US balance of payments deficits and temporary import surcharges of up to fifteen percent. That authority, however, only lasts for one hundred and fifty days unless Congress approves an extension.
So again, AIPA made sense in terms of something fast acting but also not requiring further intervention by Congress.
I mean, here you have a Congress that's seemingly not going to object to almost anything that Trump does, but doesn't the Constitution give Congress the sole authority to regulate US trade, not the president.
Well, that's true. The Constitution does give Congress the power to regulate foreign trade, but then Congress has over time delegated much of that authority to the President and to the executive branch. To the point, now, the US Trade Representative has the lead role in negotiating treaties, and other agencies have lead roles on international trade as well. So yes, there's a constitutional issue, but at the same time, Congress has delegated a good deal of that power to the
executive branch. Interestingly, eight years ago, when the steel and aluminum tariffs were put in place, many of members of Congress were concerned that the President had exceeded his authority, and there were proposals to change Section two thirty two
to take away some of that authority. None of those proposals ever moved forward, and so today the situation is the same as it was four to eight years ago, with the President still having sweeping powers to determine whether imports are a threat to national security.
Well, he's considering steel triffs coming up, so maybe there'll be another chance to litigate that issue. So the US Supreme Court has established this major questions doctrine, and it directs courts, as you know, to reject an agency's interpretation of a statute when it presents an issue of great
political or economic significance. It was used to strike down several Biden administration policies, some that were said to be based on emergencies, his eviction moratorium and vaccine mandate during COVID, his rules on greenhouse gases in twenty twenty two, and his planned to cancel student loan debt in twenty twenty three. So could the courts use that doctrine to invalidate this teriff action.
I think it's important to note that these types of international trade issues almost never reach the US Supreme Court, and all of the recent questions about the president's ability to use tariffs have been upheld by the Court of International Trade in New York, three judge panels of that court, as well as the Court of Appeals for the Federal Circuit.
So it is very unlikely that a question relating to tariffs or the president's authority to declare an emergency or a national security situation would be ruled on by the Supreme Court.
You said, and that judges are not likely to second guess a president on what constitutes an emergency. Do courts ever go beyond what the president says is a is an emergency to look at whether it really is well.
It was notable that during the Section two thirty two appeals relating to steel and aluminum, there were three judge panels of the court, and although the court did uphold the president's action, at least one of the judges filed a separate opinion to note the concern that perhaps the actions were not taken with respect to national security, but solely to address unfair trade practices, which would normally be done under different laws anti dumping and countervailing duty laws.
So there was some doubt at least among some of the judges, even as they upheld President Trump's decision in the prior administration.
Because Trump, when he was announcing these tariffs was also talking about trade deficits and putting tariffs on chips and oil and gas and steel, and that sounds more like economic reasons.
Well true, and of course I think the announcements were very careful to mention items that are important under AIPA. That the president in announcing these tariffs on Mexico, Canada, and China specifically mentioned sentinel trafficking, specifically eliminated small volume shipments and those subjects to tariffs, and took steps to cite the extraordinary threat posed by illegal aliens and drugs, including pentanol, as the basis for the tariffs that were announced.
As we've said, this is a novel use of this law. Was President Nixon's use of the predecessor law to AEPA in nineteen seventy one to impose ten percent tariff on all imports to deal with a monetary crisis. Was that the closest any president has come to this action.
That's right. The law that preceded AEBA did result in tariffs imposed by President Nixon, but AEPA has not yet been used for that purpose.
And a court did uphold that this seems to change almost from moment to moment. But tell us what the status of the tariffs is right now.
As of today, the tariffs on Canada and Mexico were paused or suspended for thirty days while the situation at the border is addressed. The ten additional tariffs on China are still in place, and China has announced retaliatory tariffs. Now again, the two countries are talking and negotiating, and it is at least possible that there will be a similar pause after those negotiations, but we just don't know at this point.
President Trump talked about, you know, there may be some pain for the American people. Do tariffs normally help or hurt the situation for consumers?
Well, I think targeted tariffs do not necessarily result in inflation. You know, we bring trade cases against China all the time on solar panels, on golf carts, on wood products, on steel, and the International Trade Commission has found heatedly that that has not resulted in harm or increasing consumer prices, a very very modest effect. Enny, But of course, broad based tariffs across all three countries are a different story. And you saw the stock markets react very negatively on Monday.
And President Trump, I think is sensitive to wanting to maintain economic strength and not wanting to harm the stock market, and so even those tariffs are a centerpiece of his economic plan and he's likely to continue to pursue them, but he also will always have an eye on the economy in the stock market. At the same time, I believe it.
Looks like he's using the tariffs to negotiate with Canada and Mexico and China.
There's some degree of that, but we're also telling clients don't assume that the tariffs are just to get a better deal, for example, in the US Mexico Canada agreement negotiations, which are scheduled to start next year. Again, tariffs are valuable to this administration as a part of the overall economic plan, not just as a negotiating tool. So both are involved. But it's a mistake, I think, to underestimate the president's actual willingness to use tariffs, not just to threaten them.
So we mention what a court might do or not do. Is it likely that any group that's affected would even bring a lawsuit.
In this case, I think it's entirely possible. I don't have any knowledge of that, but I could see certain industry trade associations or broader business groups perhaps filing a challenge, or perhaps specific companies and industries as well. So it wouldn't surprise me if there is a legal challenge and even possibly an attempt to get an injunction on any terra that are put into effect. But at the same time, for the reasons I've mentioned, I think it is an
uphill battle. Given the deference that courts usually give to the president in areas of economic emergencies or national security issues, it.
Seems like it would have to be a brave judge to issue an injunction in this case.
Well, there are a lot of judges in the country, so I can see some that might be willing to take that on.
That is true, So what's your take on this?
Long term?
We're advising our clients to stay vigilant. I think if the first two weeks or any indication, trade is going to be an extremely important issue for this administration. And President Trump already laid out his priorities in his America First Trade Policy Memo, issued really very early in his administration.
There's going to be a great deal of activity between now in April as the administration works on a series of reports to outline and highlight their priorities, whether it relates to trade deficits, to unfair trade practices, currency manipulation, current and future trade agreements. The list goes on and on. So trade is going to be a critically important issue, and so we're advising our clients on all sides of this to be vigilant and ready to react at a moment's notice.
Because that's how fast things change in the Trump administration. Thanks so much for being on the show. That's Timothy Brightbill, co chair of the International Trade practice at Wiley Rhin. Google went to a San Francisco federal appeals court to try to get it to overturn a jury verdict that had declared its app store for Android smartphones was an illegal monopoly, but the three judges appeared skeptical. Joining me
is Jennifer Ree, Bloomberg Intelligence Senior litigation analyst. EPIC filed separate antitrust cases against Apple and Google on the same day in August twenty twenty, and they resulted in dramatically different outcomes.
So tell us about that, yes, right, And that's one of the issues in the appeal that Google just argued yesterday. So what EPIC is really going after with both of these companies is the fact that each one of them, on their mobile devices, their phones only allow people users to download apps. On Apple, it's through the App Store,
and on Google it's through the Playstore. And what EPIC really wants is to be able to be a distributor on those devices and have its own app store, so if people want to download an app, they could go to Epic store. And the other thing that Epic objected to that both of them do is force users when they buy an app or make an in app purchase in the Playstore or app store to use Google's or Apples billing payment systems. Right, so Epic challenge both of them.
Now they operate their businesses when it comes to the app store in the Playstore very differently. And the Epic lawsuit against Apple went to trial at bench trial before a judge only, and the Epic versus Google went before a jury. And yes, they came out with very different results. And part of the reason is because they did something
in anti trust that's called define the relevant market differently. Now, in anti trust cases, the relevant market can make or break a case, and in these cases it actually did because what the relevant market is is a threshold determination of the sphere of competition. How do these companies that compete that are alleged to be harming competition, well, what is the sphere of competition that they're harming? And the Apple case, what Epic tried to say is that it's
just the distribution of apps on iOS devices. And in the Google case, they said, well, it's the distribution of apps on Android devices. The judge decided that they had not defined the market properly. In the Epic versus Apple case, she said, no, no, no, Epic, you have games, you distribute games, you create games, and you want to sell games. This is about about mobile digital gaming transactions. Where can
a consumer play a mobile digital game. So what she said was it's broader than just Apple, and because you failed to define the market properly, kind of everything else that followed with respect to the evidence that Epic presented in that trial didn't really work because they presented evidence of market power in just an iOS market and evidence of anti competitive effects in just an iOS market. And so what the judge said is, well, this market was wrong.
It's a broader market than that, and so you failed to prove that these things happened in this broader market. Apple, you win. That's basically what happened. Now, she did find that Apple violated one California state law against unfair competition, but that was really separate from all of this. In the Google case, the jury found pretty much exactly the opposite.
They said, oh no, no, no, the market is the relevant market for antitrust purposes is app distribution and Android devices and billing systems, billing payment systems in the play store. Those are the relevant markets focused on just Google, which is a narrower market than what was found by the judge and Epic Versus Apple. And what that resulted in is the jury finding that Google has they have a
monopoly if it's just them, and that's it. Of course they have a monopoly, and everything else followed from there. And in that monopoly they illegally maintain the monopoly through various agreements, they have various conduct that they undertook, and
so you had these very opposite outcomes. And this is one of the things that Google argues that the judges should have viewed this as issue preclusion, meaning you never ever should have let the jury decide in the Epic versus Google case about the relevant market because it had previously been decided by a judge.
Were the judges receptive to Google's arguments.
I'll be honest, after listening to the arguments yesterday, I do think Google's going to lose on that. And I think it's because what the judges said is, look your ecosystems and the way you operate in the business. Apple versus Google is quite different. Apple's a walled garden. They're vertically integrated. They do everything themselves. They have their own operating system, they build their own phones. They operate as a walled garden. They don't license their technology Google. You
do not. You have an operating system that you own Android, and you license it to a whole bunch of makers Android phones, and consumers buy those phones from those makers. You have agreements with those makers of phones that the jury saw as anti competitive. And I think where the judges, at least two of them were going is that they saw the sort of the factual differences in the way the two companies operate in the market as different enough that it wasn't an issue precluding matter that it was
okay in this instance. I think this is how the panel will come out it was okay in this instance to allow the jury to evaluate again what the market was that Google competed in. From a logical perspective, it doesn't seem to make much sense.
Often in anti trust cases, it's a judge who makes the market definition. Leaving that to a jury will lead to inconsistent results. They're not looking at what Apple did, They're just looking at what Google did, and so it does seem like Google is being given an unfair shake here,
But the judges didn't seem to think that. Judge Gabriel Sanchez said, even if Google does vigorously compete with Apple, that doesn't mean Google can create its own ecosystem where it acts as a monopolist through the Google play Store, and Judge Danielle Farrest said, there are clear factual differences between the Android world and the Apple world, and all of your arguments sort of brushed that aside, But there isn't a case where they're comparing both of them. Something
seems off here. I don't know what it is, but something seems off.
So I would agree with you that something seems off because from a logical if you're just thinking about this logically, in one case, you say Apple competes against Google, it competes broadly, and you're saying Google does not, and that doesn't make much sense. But at the end of the day, if you look at what the legal requirements are for issue preclusion, to say this has already been a side,
it can't be decided again. I think that the judges felt that this didn't quite meet those requirements, that there was enough differences in the factual matter that we're behind these allegations and the way the companies do business that they don't see it that way. So it could be a very odd situation where we come out with these kind of competing decisions. And it's strange because in a way, with Apple's walled garden, it's actually more restrictive than Google
because Google does license out this Android. Other OEMs make the phone, and some of them do put Samsung's own app store on Google's phone, and Google does allow that. Now it does pay some of these OEMs incentives to not do that or to at least favor the play store. That was one of the issues that came up. But it is a more open system than Apple's system, and so where Apples is competing less essentially, and here we're saying Apple's competing more. So it is a strange outcome.
So Google also argued that they should have been entitled to a trial by the judge rather than the jury, so they made a set up before this and that sort of changed things.
Yeah, it is very confusing, and it really comes out of having a complicated procedural background. There is a constitutional right for a plaintiff to have a trial by jury if they want to. Where they're asking for monetary damages, they're asking to pay me for my losses. And in this case, you had many plaintiffs that sued Google over the same thing, the same conduct, and all of those
cases got combined, they got consolidated. It was really common, you know, if you bring the same claim different plaintiffs, you get consolidated in one case. It's judicial economy. Most of those plaintiffs, except Epic, asked for monetary damages, that's what they were seeking. Epic was only seeking an injunction. Google, you have to change your conduct. We're not looking for money. We want you to change your conduct. Where are plaintiffs
only seeking an injunction? They don't necessarily have the right to a jury trial. But there were so many plaintiffs in the beginning, it was a given that it would be a jury trial because they had asked for one. So Google did not object. As a matter of fact, there were a number of filings along the way. This is as you said, been going since twenty twenty, where it sort of maybe could be interpreted as Google consenting to the jury. But over time, one by one, Google
settled with all of these other plaintiffs. There were states, there were developers that were consumers, and Match dot Com and Match was the last plaintiff other than Epic to settle, leaving only Epic. And once Match was out, there were no longer any claims to be tried where a plaintiff was seeking money damages. And at that point Google said we didn't want to go before a jury, we want to go before a judge. And the judge denied that motion.
This was on the eve of trial. He said it was too late and that it would be prejudicial to Epic. And this Google basically is arguing that was wrong. We should not have been forced to go in front of a jury. We objected to the jury. It was wrong for the judge to deny that request. It wouldn't have been prejudicial, and we should have been allowed ad bench trial. And I think in this case the judges were a little more sympathetic to that argument than they were to
the issue proclusion argument. It's possible they might be on Google side on that.
One Google's lawyer pointed out, the judge wrote something like a two hundred page opinion and the jury answered fourteen questions. So there's a huge difference in having a judge decide an anti trust case. And I always think that anti trust cases are better decided by judges than juries because of the technicalities and complexities. So what the judges, seeming sympathetic about the jury trial issue, might they reverse?
You know, I'm not so sure that it would end up in a reversal. What one of the judges suggested and they may be thinking about, is that the jury decision could be treated as an advisory jury. There are advisory juries. They come up with their opinion and their decision and it's not binding on the judge. The judge also sat and heard all the evidence that was presented
to the jury. He can use it any way he wants to, But then he has to issue a long detailed conclusion statement of facts, conclusions of law, you know, justifying the endgame, justifying that end decision, rather than the few questions the jury answered. Some of them were just check markting yes or no. So it's very it's very vague.
Let's say Google loses. I'm sure if they lose, they're going to try to appeal to the full nine circus. They'll appeal to the Supreme Court. But what did the judge order below in this case?
Yeah, the injunction is fairly broad. I think I was surprised by the breadth of the injunction. And Google is also appealing the injunction some of the measures as improper.
So Google is being forced to basically stop paying these OEMs to prefer Google's products and stop conditioning access to certain Google apps that these OEMs may want to pre installed, like YouTube on also installing Google Play Front and Center and nobody else, so, you know, you kind of give more freedom to the OEMs to do what they want to.
With respect to playstores, I think the bigger piece of it, though, was that Google's required to distribute through its own playstore other app stores, so, in other words, distribute your own competitors, put them in your playstore, so users can download another app store that they can switch to and not use Playstore anymore. And not only that, they were required to hand over their entire catalog of apps to these new distributors,
these news stores unless a developer objects. You know, developer has the right to say I don't want to be in some of these other app stores. So this is really pretty big deal. It's three years, which isn't very long,
but it's still a pretty significant impact on Google. I think it will cost, according to Google, a lot of time and a lot of money to do this, and it also, according to Google, makes the phones less safe and less protected because they don't have as much ability to scan an entire app store as they do to scan a single app, you know, to check it for whether it's fraud, whether you know it's fake, et cetera, right,
and how much it might harm a user. So they've objected to that because they said generally in antitrust companies don't have a duty to deal with their competitors. They don't have a duty to just hand over their proprietary materials to a competitor. And this is part of what they argued in their oral arguments. And I think that there weren't as many questions about the breadth of the
injunction and whether or not it was appropriate. But it's possible that the judges may also be thinking about the injunction and whether the terms were too onerous.
So now let's just put this in perspective. This was the first anti trust case that Google lost. Then we go to the huge antitrust case filed by the Justice Department that Google also lost. Tell us where that case stands.
So yeah, there are actually two others. One that has a verdict a liability decision, and one that we're waiting on which is quite delayed. We thought it would come out by December. Here we are in February. So in the Department of Justice suit against Google over monopolization of search,
the illegal monopoly maintenance of its search engine right Google Search. Essentially, Google was found to have basically been paying browsers right like Safari, other browsers their search access points to install as the default in back of that people don't see it, but to install Google Search as the search engine. Right. So if somebody clicks on Safari right off the bat, they do a search in Safari, they're using Google Search.
They just may not know it. Now people can go into their computer, their phone, they can change that default search search engine. Most users don't know that or don't know how to do that. And all of these agreements. Google's paying quite a lot of money, by the way, to Apple, I think over twenty billion a year to install Google Search as the default. So these payments were found and the way also Google was treating the OEMs
that make the phones were found to be illegal. Google was illegally maintaining its monopoly in search, kind of blocking out being blocking out duc dot Go, blocking out any other nascent competitor that might want to come along. They were found liable for doing this. Now we're in what's called the remedy phase now, because now what's left is for a judge to decide, well, what is the remedy going to be? What am I going to force Google to do? There will be hearings this spring on that
I think probably about a week. Can never en it's never ending. Boy oh boy, it's taken a long time. It took a year for the liability decision to come out. It will take another year for the remedy decision because the judge said he expects to rule in August after these hearings in the spring, talking to experts. And this is a big deal because the Department of Justice did ask as part of the remedy for Google to be forced to sell Chrome, which is a pretty big deal.
I don't think it's going to land there. I don't think that's what the judge is going to do here. I think that's probably overkill, given this is really just about paying other browsers and other search access points to install Google as the default. Seems to me, the way to fix that is say you can't pay them anymore
to install Google searches the default. There may be some other requirements to allow some interoperability or share some of the data from all the searches that have been conducted with some of these search competitors, to allow them to try to improve their own to improve being or improve doc dot Go. But I don't think it's going to turn into a divestiture situation. And you also have the
change in administration that could impact this. It was Biden's Department of Justice that put in their remedy request for Google to be sold. And even though you know our president does tend to change his mind, he has already commented that he doesn't necessarily think that that's really what
should happen. He does think Google needs to be punished, that's what he said actually in a Bloomberg interview, but that maybe breaking it up is going too far, particularly because we're focused he's focused on competing with China in the tech world. So it's possible that his Department of Justice, once it's really up and running, will amend their remedy request, maybe take the divestiture off the table. I don't think it was going to happen anyway, though, So that's one
and the other one is the ad tech case. This is the Department of Justice, and I should say states were aligned with the Department of Justice and all of these cases too as plaintiffs, many states. And that case is basically challenging Google's conduct in the ad tech space, which isn't really a space that we as just users
of technology every day really understand. But these are the services and products and software that are used by digital advertisers and publishers to connect together for the advertiser to place the advertiser on a publisher's site in the right place, targeted to the right users. And there are a bunch of different products along the way, and Google owns all
of them and has dominance for some of them. The allegation there is that Google is essentially because it has control over this whole chain and nobody else really does. There are other competitors for certain pieces, it can shuffle those products, the publishers trying to sell their space, and the advertiser trying to sell the ad it can push it through all of its own products, therefore taking the
fee all along the way. Right, So that case, we do think also will be a liability decision likely against Google, and we're waiting to.
Hear Google certainly not doing well at the trial stage. Maybe they'll do better at the appellate stage. Always great to have you on, Jen, Thanks so much. That's Bloomberg Intelligence Senior Litigation Analyst, Jennifer Free. And that's it for this addition of the Bloomberg Law Show. Remember you can always get the latest legal news on our Bloomberg Law podcasts.
You can find them on Apple Podcasts, Spotify, and at www dot Bloomberg dot com, slash podcast, Slash Law, And remember to tune into the Bloomberg Law Show every weeknight at ten pm Wall Street Time. I'm June Grosso, and you're listening to Bloomberg