Gina Smialek
Appearances
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
So the 1977 law gives you a lot more unilateral, immediate authority. It allows you to just kind of throw out a number and threaten another country with it. Whereas these investigations take time. You know, they take weeks, maybe months to complete. But what we've seen so far is that the Trump administration has really used a combination of the two.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
And so they have a bunch of investigations, open, pending, not completed, that would potentially allow them to hit additional sectors with tariffs. And so it's entirely possible that we see more of these sector-specific tariffs and fewer across-the-board tariffs. And those could still be very painful for America's trading partners.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
Yeah, you know, this comes at this really crucial moment for the Trump administration because they had been trying to make 90 deals in 90 days and they are well short of that target. And so I think this is sort of entering the ferment at this moment where we're in this really intense period of negotiation and there's a lot of pressure on the Trump administration.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
But I don't think it's a foregone conclusion that things are going to get worse from here. You know, I think we saw stocks rise on this decision because at least people in financial markets think that this could potentially de-escalate the trade war.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
But I definitely heard some people voice the concern today that the Trump administration is going to feel like they need to reassert their bargaining position and that that feeling of being backed into a corner could force them to take more drastic action or could force them to speed up some of these sector-specific tariffs.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
in a way that would really hurt trading partners or in a way that would really hurt companies in some specific countries. And so I think there is this concern that you could end up with a deepening of the trade war out of this.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
I think that's right. And I think actually a good example of what that might look like takes place here in the European Union. So where I'm sitting, the EU has been facing a pretty hefty tariff threat from the U.S. President Trump said last week that he was going to slap 50 percent tariffs on the EU to essentially force it to come to the negotiating table.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
With this court case, it's now unclear whether he'll ultimately be able to use those across-the-board tariffs to try and sort of wrestle the EU into a negotiating position. But even if it turns out that the original decision stands and that he cannot use the 50% tariffs, the EU is not totally out of the woods.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
There's still some serious risks that the Trump administration could use other tariffs to kind of force it to bow to the administration's will, including sectoral tariffs on things like pharmaceuticals, which are a major export for the EU.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
So essentially, the Trump administration might not be able to use this sort of preferred tool of just ratcheting up tariffs, but it might have other options in its back pocket that could be, if not equally bad, at least very bad for somewhere like the European Union. And so I think the upshot here is that this is a new chapter in the trade war, but the trade war is definitely not over.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
Right. So this case was fundamentally about whether President Trump has the authority to enact across-the-board tariffs on U.S. trading partners without approval from Congress.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
And so it was about this 10% tariff that has been applied to a range of trading partners, including the European Union, which is what I cover, and which have obviously made it a lot more expensive to import products from overseas into the United States.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
And so we saw the wine company you talked to, a women's cycling apparel company, an online fishing tackle company, band together and take this to a court and say that this was an over-interpretation of a pretty obscure law that had allowed these to go into effect in the first place and that it should be overturned. And remind us, Gina, what is that law called? Yeah.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
So it is this 1977 law called the International Emergency Economic Powers Act, which is what we in trade circles all call AIPA. And it is basically the cudgel that President Trump has been using to wage his trade war on global trading partners. It's not the only thing he uses, but this is the law that he uses to apply tariffs of varying sizes across
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
across the board on products from a range of trading partners. And so it's been really important to his strategy of kind of surprising people with big, varying, kind of shocking tariff packages. This law is a sort of unusual tool to use for something like this because it primarily concerns trade embargoes and economic sanctions.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
It was originally conceptualized to be in reaction to national emergencies, and the administration has basically been arguing that the trade situation is a national emergency. So this is this really unusual interpretation of this 50-year-old piece of legislation, and this wine importer and these other companies basically take it before the court and say, this is too broad.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
Can you just walk me through their decision? So the decision essentially said two things. It first said that a set of tariffs that the Trump administration has put on Mexico, Canada, and China in response to the fentanyl trade is not a good use of this law. And it also, importantly, said that across-the-board tariffs, these tariffs that apply to everyone at 10% currently—
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
is too broad of a use of the law and that the law was not meant to give the president unbound authority to just put tariffs on whoever he wants at whatever rate he wants. And as a result, they are basically blocking these tariffs. You know, this latest news
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
Right. It is a law to keep track of. I think it's important to emphasize what's not affected, and that is sector-specific tariffs. So you may remember that there are 25% tariffs on steel and aluminum and on cars. Those tariffs are under a different law entirely and are not subject to this ruling.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
The tariffs that are subject to this ruling are across-the-board tariffs that have applied to a bunch of American trading partners and which were announced early in April on what President Trump called Liberation Day. Those are currently at 10%, but they were set to bounce back to higher rates that were specific by country after a 90-day pause, so in mid-July.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
And they've really been sort of the center of negotiations. This is the thing that Trump is negotiating with countries across the world about.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
Well, this really damages President Trump's ability to do the kind of negotiating that he tends to prefer to do and which he has very much been doing throughout this trade war. So what we've seen him do repeatedly is kind of art of the deal, unpredictable style of negotiation, where he announces really big tariffs on trading partners and then rapidly takes them off and then threatens them again.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
And so it's been this sort of, you know, you get a tariff, you get a tariff. approach of trying to keep everybody on their back foot. And he's been doing that unilaterally, sort of King Trump style, not passing it through Congress, not taking the time to do some big investigation. And he's been able to do it very quickly and very nimbly because of this creative use of this law.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
And now suddenly it seems like that might be off the table. Although I think it would be premature to say that this is the end of the trade war. I've been talking to a lot of people today who are very nervous about what happens next. I think the word of the day is probably chaos.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
And, you know, I think there are a lot of questions about whether there's actually potentially a risk that this actually provokes the Trump administration to do something even more drastic.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
So the most obvious option that they have is try to get the ruling overturned. And we've already seen some action there. They've applied for and then been granted a stay pretty quickly after the ruling. So legally, we're now in this sort of wait-and-see moment where it's clear that the tariff block is not going to take effect at least immediately.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
And it's very clear that the Trump administration is... going to really try and get this overturned in court, and it could even end up being escalated to the Supreme Court potentially. So clearly there are some legal options here. And then I think the second bucket of options is what they can do on the trade front.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
And one option there is that they could use another provision in trade law to apply some tariffs up to 15% on trading partners for 150 days. And after that, they'd have to take it to Congress. But there is a period here where the Trump administration could do that without congressional approval.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
I think people think it's possible that he'll do the 150-day version of this. I think people think it's a little less likely that he's going to try to get something through Congress because while that would put this on very solid legal footing, it also means you have to get it through Congress.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
But I think that there are other tools that Trump has at his disposal that he could reach for maybe a little bit more readily that he's used before and which are really legally solid. And those are the ones that people are really worried about.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
So there are two provisions in trade law that allow you to slap tariffs on trading partners after investigations. One is a national security investigation, and it allows you to apply tariffs to specific sectors. The other is an investigation into unfair trading practices, and it allows you to apply tariffs to a specific sector. trading partner, so an individual country, but across the board.
The Daily
Did a Wine Importer Just Sink Trump’s Trade War?
These are the provisions they're currently using to hit steel and aluminum and to hit cars. And so this isn't a totally novel idea, which would put tariffs on slightly stronger legal footing.