Supreme Court Strikes Down Trump’s Tariffs
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What is the main topic discussed in this episode?
Today's number, $150 billion. That's how much the U.S. government could be refunding importers now that the majority of tariffs were ruled illegal. That's right. Welcome to an emergency episode of Prof G Markets. Ed, let's get right into it. The Supreme Court just struck down the majority of President Trump's tariffs. In a 6-3 decision, the justices ruled he exceeded his authority by imposing the tariffs without congressional approval. This marks the first time the court has struck down one of his second-term policies. Stocks rose on the news. So, essentially, Ed... These tariffs were implemented under sort of an unusual rule, the International Emergency Economic Powers Act, that's usually only deployed during 9-11 or imminent war or some sort of extraordinary action.
And the Supreme Court said, no, you really don't have the authority to do this without Congress's approval. So it feels like a big deal. What are your initial thoughts on it?
My initial thought is we are experiencing our second Liberation Day. I would say to you, happy Liberation Day, Scott. We're finally liberated. I don't think that we're going to see these tariffs.
What was the Supreme Court's ruling on Trump's tariffs?
I mean, put it this way, I don't think that Trump is going to go down without a fight here. So I think that's probably why you're seeing this reaction from the markets, which I would say is kind of tepid. I mean, I think there's an element of markets trying to understand what is actually happening here. How is this all gonna play out? How is it gonna work? But I think there's another side to this, which is, is this actually going to mean that tariffs are going to disappear suddenly? And I think the answer to that question is probably not. But, you know, I think this is a good moment for the Supreme Court. I'm glad that they had the spine here because it's true. We're not in an economic emergency right now.
And that was the card that Trump played to have these powers that are more like the powers of a king. And so I think what the Supreme Court has said here is, no, this is power that resides with Congress. If you're going to implement a tax on the American people, which is what this is, despite whatever Trump will say about it, if you're going to do that, you need to get congressional approval. And that's not something he did. So basically they're saying, put it to Congress. And then the question will be, will Congress be down for this? I think the answer is going to be no, but we will see. What are your initial reactions to this?
In a weird way, I think this sort of benefits Trump in the short term because it's an elegant off-ramp. You can say, I tried, it made sense, but the Supreme Court overruled me.
How did the markets react to the Supreme Court's decision?
And I do believe, I was shocked the markets weren't up more. I mean, there's certain sectors that were especially, the tariff losers have spiked, right? Elf Beauty's up 2%, Restoration Hardware's up 9%. Crocs up more than 4%. Stanley Black & Decker, 3%. Williams-Sonoma up 4%. The companies that got especially hard because of tariffs because they bring in... You know, we don't manufacture a lot of furniture anymore inside of the U.S. So in the short run, I actually think he might be a winner here because I think the economy in the short run will get a boost here. If you look at what effectively has happened, about 15% of our GDP is... And then, loosely speaking, the average tariff is 20%. So that's a 3% hit to GDP, if you will.
But some of those companies managed to wiggle out of them. So call it 2%. But that 2% was nothing but really just taking money in the street and burning it. It wasn't money being invested for growth. It was money that we were paying the government. and that reduced consumer or increased pricing for domestic consumers, and then likely increased or decreased the market for our goods overseas because there's going to be some form of a reciprocal tariff. Now, the medium and long-term damage has already been done here. This is This is essentially, you're seeing this, you're seeing Canada leading the way around creating new trading zones and Europe doing deals with Mercosur.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:00–1:23
2
What was the Supreme Court's ruling on Trump's tariffs?
1:23–2:48
3
How did the markets react to the Supreme Court's decision?
2:48–5:29
4
What does the ruling mean for the authority of the President?
5:29–11:58
5
What are the implications of tariff refunds for importers?
11:58–12:48
6
How might this ruling affect Trump's political strategy?
12:48–17:45
7
What are the long-term effects of the tariffs on international trade?
17:45–18:39
Speakers
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