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US Supreme Court struck down President Donald Trump sweeping global tariffs, undercutting his signature economic policy and delivering his biggest legal defeat since he returned to the White House. Tyler Kendall, Bloomberg News White House correspondent joins his hair Washington correspondent. Tyler give us the latest on what we know about this Supreme Court ruling.
So it appears that the Court, in a six to three decision struck down President Trump's tariffs, those broad based ones that have to do with IIPA, the International Emergency Economic Powers Act. President put forward IIPA tariffs on two accounts. One was those ventanyl related tariffs related to Canada, Mexico, and in part on China. And then the other were the more broad based ones where he cited persistent trade imbalances.
Now we're still going through this cases coming in in real time right now to figure out the two questions that were in front of the court. One was does President Trump actually have the authority to invoke AIPA to impose tariffs, because this has never been done before. This is typically a federal authority that is used to invoke sanctions. So the question here is whether or not he circumvented Congress.
The other question was about whether or not he actually invoked AIPA correctly if he's able to by declaring these national emergencies, did those national emergencies related to betanal related to these trade imbalances reached a legal standard of what is known as an unusual and extraordinary threat, that the president would have this authority to impose a tariff a regulation of commerce in this way to achieve his objection,
his objectives. We're still reading through this, but it appears that we have one at least dissenting opinion was from Cavanaugh, of course, a Justice Brett Kavanaugh, who was appointed under nominated under President Trump, who says, quote, the court says nothing today about whether and if so, how the government should go about returning the billions of dollars that it has collected from importers. But that process is likely to
be a mess, as was acknowledged at oral arguments. So that's going to be the entire next phase of this.
It doesn't seem to matter to investors, at least for the moment. You look at the S and P five hundred. It did shoot up, it's come back a little bit. But what's notable here, Paul, is that the best performing group among twenty four groups is a consumer durable and apparel's group, lul Lemon, for instance, jumping about five percent right at the open. It's pared some of that advance
to two point four percent. Lululemon, along with other companies presumably hurt by this by these tariffs, would benefit therefore with the removal of these tariffs, although as Tyler made clear, it's not clear whether there would be a refund or how that would even be put together.
Yeah, and I'm just kind of reading some of the Bloomberg headlines. Supreme Court does not address eligibility for tariff refunds, and Bloomberg new is also reporting that hundreds of teriff refund lawsuits pending in US Trade Court. So Tyler, this seems like that's where the rubber meets the road. To the extent that anybody's going to try to get a tariff relief or tariff refunds, it's not going to be easy at least at this stage.
Well, if you want to hear a pretty startling statistic, AIPA terraffs have been collected for more than three hundred and one thousand importers, and every company that wants a refund would need a distinct claim in court. Perhaps we'll likely see a class action lawsuit that could maybe put this a little bit more broad based. But when we're looking at just a massive amount of revenue that was
raised by these IEPA tariffs alone. Of course, the Trump administration has other tariff authorities that are already in place Section two thirty two related to national security, for example, those AIPA broad based tariffs brought in last year more than one hundred and thirty four billion dollars for the US government. So it's going to be a complicated process. It likely would leave the question of refunds to a lower court, most likely the Court of International Trade, which
first took up this case. There's a few different wonky points that I had written down here on how this could ultimately end up happening. One thing to know is that there's something known as the liquidation process, which basically is the statue of limitation that a company can ask for its money back. That's three hundred and fourteen days. So some of those tariffs imposed on China have actually been imposed longer than that, so those companies wantn't get
those back. But by and large, I think we're still within that timeframe for these companies to ask for those requests.
And just the quick mention equities building on their advance a little bit. With the SMP five hundred now up a third of one percent, Treasury yields are higher, and the thinking is that the removal of tariffs would leave a budget hole that we know already surprise the hundred thirty billion dollars as of December. Treasury would need to sell a lot more bonds to bridge the gap, and that would put some pressure on yields upward pressure and of course if there are reefusts as part of it,
that would only make the situation worse. It would exacerbate these moves.
So I guess, Tyler, there's still opportunities. There are still tools that the president can use to apply some tariffs, even if this IEPA sweeping one is no longer on.
The table, right and we've already heard telegraphed from the administration that they're going to pull on these other federal authorities, some of them are already in place. We talk a lot about Section two thirty two, those National security tariffs that the administration has put forward on some of those critical sectors steel, aluminum, of critical minerals, and a lot of those other areas that have been a focus of
the Trump administration. When it comes to countering China. We could also see Section three oh one investigations that's over unfair trade practices. We saw a lot of those imposed on China under the first Trump administration. Think allegations of IP protection violations as one example. And then there's some lesser known ones like Section three point thirty eight that hasn't been used since the nineteen forties. I also have Section two on one here tariffs imposed on goods that
cause injury to domestic industry. There's a lot, But basically the crux to think of this is that the Trump administration likes IEPA because that's a lot more flexible, it's a lot more broad based. A lot of these tariffs have limits. They have to go away after a certain amount of time, and the rates can't go that high. A lot of these tariffs have a fifteen percent sealing for example, whereas we know the president in some cases has threaten tariffs you know, fifty percent and onwards.
And also all the different sections that you cited. Most of these tariffs can't be imposed instantly. There's a bit of waiting time, and we know the president wants to declare something and have it kind of be in effect almost immediately, and the IEPA tariffs allowed him that flexibility.
As you put it, exactly, a Section two thirty two
investigation on average nine months to complete. We have seen this administration in some cases do this under a more expedited timeline because they actually pulled on investigations that were launched under the first Trump administration, so they were able to make the legal argument that they already had such a bolstering of the information behind them that they could make the determination that this meets the national security concerns or the unfair trade allegations to put on their terrafts.
But to your point exactly, Scarlett, this definitely limits the flexibility of the administration.
Tyler, thank you so much.
And it's just our luck that Tyler Kendall happened to be a new.
Clearly, she was not anticipating this.
I mean, we knew that this decision was coming along at some point, but the Supreme Court had passed up the previous two or three instances could have come out with this decision. Tyler Kendall, Bloomberg's Washington correspondent, on our way back to DC this afternoon.
Thank you so much. Thank you.
All right, let's go to Judie Grossel right now, Bloomberg Walls host. She joins us here in studio June. I guess this was expected from somewhat expected from a legal perspective.
Does the six to three.
Vote, does that mean anything one way or the other, as opposed to maybe have a unanimous nine zero.
Well, I mean, I guess.
It would be preferable for the people in the majority, for the justices and the majority to say, you know, this was a unanimous vote, but otherwise, you know, it doesn't really matter. It's sixty three with the very conservative justices.
In the minority. I mean, this was expected.
After the Supreme Court oral arguments, it seemed as if this was the definite conclusion, and so people were wondering, what was taking so long?
Well, what's taking so long?
As it's one hundred and seventy pages, so it's kind of difficult to get through and to figure out exactly what happened.
But what happened during the oral arguments was that you.
Have this statute, AEPA that no other president has used to impose tariffs. And under this statute there's a word call regulate. So how do you interpret regulate? Does that mean you can impose tariffs or not? And you know, a lot of the justices, particularly the liberal Justice, is harped on the language of the statute.
What does it mean?
I mean, this is a court that's originalist, and they're trying to interpret all the time with the words of a statute or the words of a constitution means. So they were looking at this and saying, you know, where do you get the authority in this statute to impose tariffs?
And it was pretty.
Obvious during their oral arguments that there were enough votes, particularly the Chief Justice. And the Chief Justice wrote this opinion. And I'll just note that when I predicted that, because whenever there's a big opinion that he's in in the center, he writes it. He wrote the you know, the Supreme Court opinion giving President Trump limited presidential authority to be let's say to be I'm trying to think of the
right word. Not to be prosecuted for ax committed criminal acts committed in office.
He wrote that one.
He's written like all the very very big opinions. So when we heard what he said in the oral arguments, it was pretty obvious what was going to happen. And it's just a question of why it took so long. And I think Justice Jackson had said last week that in an interview that there are nuances to this so and we won't be able to see the nuances until.
We get through some of this. Yes, pages one hundred and seventy pages.
It's I mean, there are concurrences and partial concurrences. It's it's really it's messy. I'd say it's messy.
And that's exactly how Brett Kavanaugh, the one of the dissenting justices, described the refund process. It was likely to be a mess, as was acknowledged at oral argument. Is it surprising then that the justices did not address the extent to which importers are entitled to refunds That it's just basically it back to the lower courts.
Well, I think what the justices try to do is write as narrow an opinion as they possibly can. So why get into an area they really don't have to get into. And as you say, there's a lot of you know, it's going to be messy. And so I think that that's the way this court operates. They don't want to rule on something that they don't have to rule on. And here they did a ruling on tariffs. You know, a week before the President is going to make his State of the Union address. That's why I
didn't think it was going to come down today. We were talking about in the newsroom and like, why would they do that? And then they're going to sit there. Is he going to say something about it? He probably will say something about it while they're sitting there. A lot of them will be sitting there. The Chief always goes, so they'll be.
At the State of the Union.
The Chief always goes, Elena Kagan goes usually sort of mayor goes. Alito hasn't gone since Barack Obama said something about Citizens United and Alito was shaking his head back and forth.
So he hasn't been there. But maybe he'll be there for this. I don't know. So and Justice cours.
It has gone Justice Kavanaugh, Amy Coney, Barrett, so a lot of them do go. So it'll be interesting to watch and to see whether any statements are made from the President about that and whether there's any shaking of heads.
So I was wrong about that, and I admit it.
So this came as a surprise this morning, even though the decision itself what they did didn't come as a surprise.
Yeah.
If anything, this makes the State of the Union address that much more interesting to see how it all shakes out the body language, not just what President Trump will say, because I'm sure he'll probably say something even before his address next week.
Yep.
Absolutely, we'll certainly given this.
This the signature economic policy that he has really defined his administration.
He's been talking about how the Supreme Court, I mean several times he said the Supreme Court has to rule in the right way on this. So and he's always bit well because they've been ruling so much in his favor on the emergency ducket. He's been very complimentary about the Court. But we'll see what happens.
II.
Dad, that's going to last all right.
We'll stay on top of the President's social media output here today, jun Grassa, thank you so much. We appreciated Jean Grasso, a Bloomberg Law host, here, joining us here for this momentous decision. Here, the US Supreme Court struck down President Donald Trump's sweeping global tarrits, undercutting his significant economic policy and delivering his biggest legal defeat since he returned to the White House. That is, according to Bloomberg reporting Scarla Fu and Paul Swooney live here in our
Bloomberg Interactive Broker studio. I'm looking at the top live again. Great great reporting, real time on this breaking story. Sean don and senior economics writer. He writes, it's not overstating things to say this is a historic decision that applies on at least two fronts. Number One, the policy at issue, Trump's increase in tarists last year was the largest. It's the infamous nineteen thirty Smoot Hawley duties. Number Two, it's
application the presidential powers over the economy. Scholars and the lead up were calling this the biggest case inconomic policy realm since the Youngstown steelcase in nineteen fifty two, in which is the court block Harry Truman's been to nationalized steel mills during the Korean War. Others have liken the idea of Supreme Court rebrooking Trump on tariffs to the Court's fight with FDR over the New Deal, So.
A lot of historical contexts.
There are certainly a huge landmark decision by the Supreme Court determining that President Trump's global tariffs are illegal.
Let's bring in Henrietta Trees.
Henrietta is our go to expert on all things policy and economics. She is a managing partner and director of Economic Policy at Vetta Partners. Henrietta the market had largely anticipated this. We saw it with the reaction in certain retail stocks, companies that would benefit from the rollback of these tariffs.
How are you looking at this?
I agree, this is just a tremendous day, a huge win for the Constitution, for folks who cover tax policy, for anybody who remembers the Revolutionary War fought against specifically a taxation power that Congress did not have any say over. So this is, in my opinion, the largest and most impactful macroeconomic ruling the courts have ever delivered. So just a tremendous day. It is in line with what the market was expecting. You could see that investors were very
prepared to rip the retail stocks. Everybody who's been exposed to the forty percent trans shipping tariffs, the ad hoc fifty percent tariffs on Brazil, the wide ranging threats of two hundred percent tariffs on French wine that have just been spewing out of the White House for twelve months now. So it's really an exhilarating day, an incredible day for the Constitution.
In my opinion, Henriette, is this do you think in bolden any of President Trump's adversaries, whether in Congress or just within Washington d c. Apparatus, that maybe this gives them a little bit more confidence to push back. Is there any reason to believe that.
Absolutely. I think there's two ways to look at this. First of all, this is such news for President Trump. Americans hate the tariffs. They know their taxes, they know that they're driving inflation, and they don't like them. So now that that authority has been stripped away from him, the president no longer has to collect these taxes.
It's up to him to decide.
Whether he wants to migrate into new and different authorities like Section one twenty two that give him the ability to impose tires at a fifteen percent rate for the next five months.
If he wants to do that, he can go ahead on.
But the American public will be very grateful that the Supreme Court struck these tires down, and even more grateful if he keeps them off.
So that's one way of looking at it.
And Republicans on Capitol Hail are staring down the barrel of a very ugly affordability narrative election cycle where we've seen races as diverse as Texas swing thirty one points away from President Trump just since he was elected.
Those are tremendous.
Losses for the Republican conference, and most of it is driven by the President's handling of the US economy. It's influenced not just the traditional pendant voter that we are always concerned with, but also with young male and Hispanic voters who have driven the President to his second term.
So a lot to see here.
A lot to see here. And it's not just American stocks that are benefiting. I'm looking at for instance, LVMH Hennessey in Europe climbing on the news, up four point four percent in European trading. So companies that rely on exports to the US also benefiting from this ruling. Paul asks a really important question Henrietta bas.
It's very basic. Our temps rolled back starting today.
They are legal so at border patrol.
One of the things that's questionable here is that the White House has said all these trade deals are still.
Going to be intact. You know, we've signed these agreements. That is null and void.
Now if you are an importer and you are at Customs and Border Patrol, you no longer will suffer paying for these tariffs. And the Supreme Court has told Customs and Border Patrol they can no longer collect them. So this is a problem that the White House is going to have to address. They have a number of trade
deals that they have signed. I believe there's about eight at this point, and many of them include a reciprocal tariff of ten percent in the case of the UK or nineteen percent in the case of Indonesia.
Those tariffs are illegal.
The Supreme Court has telled the Customs and Border Patrol people this.
Authority is not permitted.
So it's the importers who are going to rise up and say I'm not paying. It doesn't matter what the countries you know, independently decide or whatever the White House does.
So what do we expect this administration? How do you expect the President and administration to respond here? Do you think they will aggressively try to work other tariff routes or maybe just let this issue die and just fade away.
I appreciate the question, Paul. I am widely, wildly out of consensus on this.
But what I just astrived on Section one twenty two is just one of the many alternates and alternatives that the president has Section three oh one, which is, you know, four hundred and fifty billion dollars worth of tires on China.
We could re up that and apply it to the EU, the.
UK, or Brazil. Well, all of those have been threatened. But think about what functionally that means. It means that individual businesses will have to go out again, get their trade lawyers on the payroll to comply with brand new, potentially even unused authorities that they'll have to comply with once again. Is it a fifteen percent tire freight under Section one twenty two?
Does it exist?
Now?
When's the President going to put it on?
What do I need to worry about with the national security, taft, the confusion, and the uncertainty, which were the buzzwords following Liberation Day in April, are going to come roaring back. In the event the President decides to migrate away from my EPA and move into new and different authorities. I
think it would be extraordinarily disruptive. And again with my eye on the election cycle and then affordability narrative, the President I think is already on a very tight leash and he's not going to have the leeway to fully reimpose anywhere near the revenue that has been collected by eepas so far. So I don't think these TIFFs will ever come back at their current level, and I think will be much more restrained going forward.
How does this all add up to what the President was planning to say in his State of the Union next week, because affordability was something that the White House has signaled it's really going to start focusing on, especially with the Metrum elections coming up. Now that the tariffs are ruled illegal by the Supreme Court, how does he fold that into his larger platform?
Man, I mean, that is a pretzel of some logic they're going to have to work through here. Because, of course, the President has been saying that the tariffs have been a huge boon to the US economy. None of that is true. We just saw a very soft GDP print. We see that manufacturing jobs have lost seventy two thousand in the last year since Liberation Day. We see that prices have increased across a lot of the retail space.
So that's what consumers are feeling.
And you can't sell the American public on the idea that you're fixing our deficit problem when the deficit continues to rise and the trade and goods deficit continues to rise. So all of the arguments the White House has made are false, and now he's going to have to sell this to the American public. I suspect it'll be very uncomfortable for the front row of the House floor when he delivers the State of the Union on Tuesday. I will certainly be watching that. But they really stood up
for the Constitution here and the President's message. If he wants to migrate to affordability, he can talk about other things like the housing agenda that they have. I mean, it's not realistic to think that a fifty year mortgage is coming, but those are the kinds of.
Pieces that he should focus on.
I imagine there will be quite a bit of grievance touted on the tirefront.
Interesting.
All right, Henrietta, thank you so much for joining us. We really appreciate getting a few minutes of your time and your expertise. Henrietta Trece's managing partner and director of economic policy at Veda Partners.
We should note that the President has responded. According to Caitlin Collins of CNN, who tweeted out or posted on social media, President Trump commented on the Supreme Court ruling striking down his tariffs while inside the White House breakfast with governors this morning, calling it a quote disgrace. I'm told he told those gathered that he has a backup plan. Again. That is according to Caitlin Collins, reporter at CNN, the President calling the ruling against his tariffs a disgrace.
Paul, Yeah, no surprise there, and we'll see. I guess we were talking to Henrietta trez what the response will be from President Trump, whether he will let this kind of fade away, or whether he who use some of the other options that he does.
Have many, many different alternative options, including filing Recession two thirty two, two oh one, three oh one one two three thirty eight.
Oh boy, yeah, there's a lot exactly.
All right, we welcome back to our studios, June Grossos, Bloomberg's legal analyst here, June. Now you've had a couple more minutes to one hundred seventy page ruling.
Any don't do that to me, Paul, don't do this to me.
So, I mean, it's it is.
I mean, we're just reading some of the reporting on the Bloomberg libe really calling in a historic ruling.
It is historic.
And also it's so important because you know, as we've discussed before, this Supreme Court has been a size for ruling for Trump on the emergency docket so many times, I mean a majority of the times, more than the.
Majority, a vast majority of times.
They're just a couple of cases where they didn't allow him to go forward with his agenda on the emergency dockets. So here you have this enormous case on his you know, sweeping global plans. And if the Supreme Court had not done this, if they had gone against the text of the statute and had ruled in his favor, think about what we'd be saying right now, this court is totally in Trump's pocket, would be one of the things that
would be said. So it's so important on so many different levels, not only the level of what's going to happen now and that the tariffs have been declared illegal, but also for the integrity I think of the Supreme Court. It would have been shocking if they had ruled for the tariffs. So joining us now is Dave Townsend. He's a partner at Dorsey and Whitney, Trade attorney. David, Can you explain for us the basic premise of the Supreme Court's majority opinion?
Sure, June, and it's great to be with you. Yeah.
The basic premise of the opinion is that the IEPA Statute, which empowers the President to take action to regulate importation, doesn't extend to imposing tariffs, and so as a matter of statutory interpretation, the President exceeded the authority in issuing the global and fentanyl related tariffs.
Is there anything and I know you haven't gotten through the whole opinion, but is there anything that surprised you about this opinion?
One thing that did surprise me a bit, June about the opinion was how definitive it was with respect to the statutory interpretation question.
The lower courts had been maybe a bit more measured.
They had said that the use of the IPA authority had exceeded what I was intended to permit, and the Supreme Court, it looks to me what went one step further and said that the language of the statue doesn't permit tarif's full stop.
So David doesn't what's the sixty three vote mean to you? If anything is a win a win? Or is a nine zero better than a six to three? How do you hashild the market think about that?
Yeah, I mean I think a win is a win.
Right, you only need five to uphold the lower court and find the tariffs were unlawful.
But I do think the six to three vote.
Provides even, you know, even a sharper defeat here for the administration's arguments, I mean.
You had.
Fine and I know Justice Cavanaugh during the oral arguments talked a lot about what President Nixon did on the predecessor statue to AYEPA. Where do they find the authority of the president to issue these tariffs?
Yeah?
So the predecessor to AEPA was the training with the Enemies Act Twya, and ac Cordan previously said that the language in Twya, that is to regulate importation, did authorize limited tariffs, and so I think the Descent is pointing back at that and saying, consistent with that holding, we would find that the same language that Congress used in Twiya, that carried it over into Iepa would authorize the imposition
of tariffs. And I mean, I do think that as a matter if you were reading AEPA in a vacuum, the question of whether the language to regulate importation permits tariffs is tricky.
It's difficult explain why it's tricky.
Well, I think the administration's argument was we can clearly ban imports under that language and under AIPA, and they've done that for decades under various economic sanctioned statutes. And so the theory would go, if we can ban imports, why can't we do something more calibrated and measured, such as impose a tariff.
Just a reminder, if you're just joining us, we're speaking with Dave Townsend, partner with Dorsey and Whitney, and June Garasso, the host of Bloomberg Law. With us here Polswenian Scarlet Foo on Bloomberg Intelligence after the Supreme Court struck down President Trump's global tariffs, saying that he exceeded his authority by invoking a federal emergency powers law. Dave, let me ask you a dumb question. President Trump does not respond well to legal setbacks. We know that he appeals to
a higher court an authority. There is no higher court than the Supreme Court. But is there really no legal recourse for him left here? Could he, I don't know, seek to impeach a justice or three justices?
So I mean, I think there's there's kind of two dimensions here in terms of what happens next. One is with respect to tariff refunds and whether importers are owned tariffs, And the second is what does the administration do next? What is the US tariff policy in light of this opinion?
And the administration has been laying the groundwork, I'm sure behind the scenes, but in public too, saying continuity will carry the day as of today and moving forward, and the tariffs in one form or another will be reimposed under probably a combination of authorities. So I think, you know, the refund issues important to companies moving forward, the policy issue may not actually move that significantly, at least in
you know, the near term. I think they're going to be ready to come out with something very quickly to backfill and replace the IPA tariffs.
All right, Dave, thank you so much for joining us. Really appreciated Day Townsend. He's a partner with Dorsey n Whitney. Give us his thoughts on the legal side of this case. And of course June Grasso, legal analyst for Bloomberg, joining us as well.