התמלול המלא של Trump Tariffs Blocked by the Supreme Court (What’s Next?)

struck down all of these tariffs that the president had imposed under IEEPA.. 00:04:21.077 --> 00:04:25.208 Now, and those tariffs are inclusive of like the liberation day. 00:04:25.208 --> 00:04:30.247 We all saw, like, you know, he, the photo that he was holding up or, or that big board that President Trump was holding up. 00:04:30.487 --> 00:04:31.987 That's an iconic photo at this point. 00:04:31.987 --> 00:04:34.658 Those liberation day tariffs are struck down. 00:04:34.958 --> 00:04:39.637 And then the i, I think that the border security, the fentanyl tariffs, those are struck down too. 00:04:39.637 --> 00:04:42.322 So those were the ones, the main ones that people have talked about. 00:04:43.276 --> 00:04:43.757 That's right. 00:04:43.786 --> 00:04:46.127 Liberation Day, the Fentanyl tariffs. 00:04:46.127 --> 00:04:50.172 So those were applied to Canada, Mexico, China, the liberation Day plus. 00:04:50.581 --> 00:04:54.992 The baseline tariffs were applied to virtually every US trading partner. 00:04:55.291 --> 00:05:00.302 There were a couple others, um, related to oil and India and Russia. 00:05:00.302 --> 00:05:03.391 Those are now gone in all. 00:05:03.451 --> 00:05:12.062 Um, through December of 2025, the government collected about$134 billion of those different IEEPA tariffs. 00:05:12.362 --> 00:05:17.732 We estimate that through when the decision was made, and those tariffs have now come off here in late February. 00:05:17.942 --> 00:05:27.632 It's probably something like$160 billion in unlawful tariff collections now, um, across all of those different tariffs that have been struck down. 00:05:27.982 --> 00:05:31.701 So what is happening with all of the money then? 00:05:31.701 --> 00:05:32.932 There was tariffs. 00:05:33.367 --> 00:05:34.357 We're collected. 00:05:34.476 --> 00:05:44.497 Uh, if you saw the last podcast that, uh, we had on tariffs, I mentioned that I had to pay$70 tariff on some converse that I ordered from Japan. 00:05:45.216 --> 00:05:48.516 I need to know, am I getting this money back? 00:05:49.612 --> 00:05:49.732 I. 00:05:49.764 --> 00:05:51.745 So there's a lot of noise right now. 00:05:51.745 --> 00:05:57.535 A lot of news articles about this, a lot of speculation, but the answer should very clearly be yes. 00:05:58.029 --> 00:06:01.779 The importer of record should get the money back. 00:06:02.019 --> 00:06:04.899 Um, this was an unlawful collection. 00:06:04.899 --> 00:06:11.139 The tax has been struck down, so the people who paid the tax should rightfully get that money back. 00:06:11.379 --> 00:06:22.029 Now, there may be a difference between, like in your case, the consumer who bore the burden of the tax and who is actually the importer of record with customs. 00:06:22.795 --> 00:06:23.904 That paid the bill. 00:06:24.084 --> 00:06:26.995 Um, so there can be mismatches, right? 00:06:27.024 --> 00:06:32.545 Like if, if a business paid the tariff and then passed the cost onto the consumer, the consumer. 00:06:33.415 --> 00:06:35.394 not legally owed any money. 00:06:35.634 --> 00:06:39.295 Um, now the business may decide like, oh, we feel bad. 00:06:39.355 --> 00:06:43.584 Oh, there's political pressure or social pressure to share some of that refund. 00:06:43.944 --> 00:06:47.845 But as far as process, um, the government will give. 00:06:48.009 --> 00:06:51.279 The money should give the money back to the importer. 00:06:51.279 --> 00:06:54.639 We've already seen some big headlines of companies suing. 00:06:54.939 --> 00:07:03.910 Um, there's precedent in the past for these refunds happening automatically when tariffs have been struck down, uh, but not at this large of a scale, right? 00:07:03.910 --> 00:07:07.540 We're talking something on the order of$160 billion. 00:07:07.870 --> 00:07:09.040 That's a lot more than. 00:07:09.110 --> 00:07:12.019 What's typically refunded for tariff overpayments? 00:07:12.290 --> 00:07:16.970 Um, so it is a process question, but it should not be a question of is it happening? 00:07:16.970 --> 00:07:19.009 It's just how is it going to happen? 00:07:19.009 --> 00:07:23.480 Do people have to, um, you know, go through a certain paperwork process? 00:07:23.480 --> 00:07:25.879 Do they have to go through litigation? 00:07:25.879 --> 00:07:28.100 And that's where we don't quite have the answer yet. 00:07:29.536 --> 00:07:32.411 So in my case, Erica, is getting my$70. 00:07:33.834 --> 00:07:34.644 Yeah, yeah. 00:07:34.704 --> 00:07:39.865 Whoever legally filled out that paperwork and paid the tariff, unfortunately. 00:07:40.851 --> 00:07:41.211 Okay. 00:07:41.362 --> 00:07:41.812 It's fine. 00:07:41.841 --> 00:07:42.351 I'll be fine. 00:07:42.351 --> 00:07:43.581 I'll be fine without my$70. 00:07:43.581 --> 00:07:44.182 It's okay. 00:07:44.331 --> 00:07:45.382 It's not a big deal. 00:07:45.802 --> 00:07:47.661 It's whatever. 00:07:48.052 --> 00:07:57.831 Um, all right, I'll, I'll keep us on track and I won't, I won't just make this about my, my loss of$70, but anyway, um, so if we're thinking about, you know. 00:07:58.401 --> 00:08:03.052 With removing tariffs, uh, is sort of addition by subtraction. 00:08:03.471 --> 00:08:06.322 Um, this will improve our economic outlook, right? 00:08:07.870 --> 00:08:08.379 Yes. 00:08:08.410 --> 00:08:10.149 But, um, so. 00:08:11.105 --> 00:08:16.324 We estimated that the IEEPA tariffs would shrink long run GDP by about 0.3%. 00:08:16.324 --> 00:08:19.175 So they were clearly having a drag on the economy. 00:08:19.504 --> 00:08:25.685 Removing that is good for the economy, full stop, but we don't know what's coming next. 00:08:25.685 --> 00:08:27.064 And I'd also add like. 00:08:27.654 --> 00:08:29.904 In terms of, was the ruling good? 00:08:30.204 --> 00:08:31.134 Absolutely. 00:08:31.134 --> 00:08:33.205 We should view the ruling as a victory. 00:08:33.475 --> 00:08:39.745 Um, you know, it, it affirmed what the Constitution says as far as who has the authority to tax. 00:08:40.044

--> 00:08:46.794 Um, so in terms of the rule of law, this was a really good outcome in terms of what's happening with the economy. 00:08:47.485 --> 00:08:50.575 It has less power because it was a really narrow ruling. 00:08:50.634 --> 00:08:55.375 It was just looking at, does this one statute let President Trump impose tariffs? 00:08:55.615 --> 00:08:56.485 No, it doesn't. 00:08:56.875 --> 00:09:02.784 But however, outside of that, we have a lot of other statutes that the president can use to impose tariffs. 00:09:03.054 --> 00:09:15.475 And so really uncertainty is going to be higher here in the near term because we don't exactly know what the president will use his attempts to replace the tariffs that have now been ruled, um, unlawful. 00:09:17.126 --> 00:09:19.886 So what are, from your perspective, what are, what are the numbers? 00:09:19.886 --> 00:09:21.447 Like what, what's changed your numbers wise? 00:09:21.447 --> 00:09:24.927 We obviously have a model and we, we work on this and, and, and talk about this. 00:09:24.927 --> 00:09:25.856 Could you walk us through that? 00:09:27.070 --> 00:09:28.179 Yes, so. 00:09:29.184 --> 00:09:39.924 Right before the ruling, um, when the IEEPA tariffs were still in effect, we estimated that over the next decade they were going to raise about$1.4 trillion of revenue. 00:09:40.315 --> 00:09:52.825 They lifted the applied tariff rate on all US imports together with all the other tariffs to about 13.8%, which is a very high, um, compared to where that's been historically, around one to 2%. 00:09:53.450 --> 00:10:01.429 And we estimated that in 2026, um, all the tariffs together would cost households an average of$1,300. 00:10:01.429 --> 00:10:03.320 So that's where we were sitting right before the decision. 00:10:04.495 --> 00:10:10.524 After the decision when the tariffs were struck down, um, all of that fell right. 00:10:10.644 --> 00:10:18.684 We estimated that the, um, average tax burden fell to about$400 and the applied tariff rate fell to about 6.7%. 00:10:18.715 --> 00:10:23.664 So you can see that the Supreme Court decision the bulk of the tariffs. 00:10:23.725 --> 00:10:30.504 But Friday afternoon, uh, president Trump announced new tariffs under section 122 of 10% and. 00:10:31.409 --> 00:10:33.029 can only last 150 days. 00:10:33.029 --> 00:10:43.649 So while they were in effect, we estimate that that would have made up about 50% of the lost revenue when President Trump threatened to take those to 15% instead of 10%. 00:10:43.919 --> 00:10:47.070 Um, that would make up about 70% of the revenue. 00:10:47.370 --> 00:10:50.190 So where we've landed numbers wise is that. 00:10:50.309 --> 00:10:55.679 At least during the next 150 days, they're making up about half of what they lost. 00:10:55.679 --> 00:11:01.470 With IEEPA on an average basis, households will still face a$600 tax increase. 00:11:01.470 --> 00:11:06.090 This year, the applied tariff rate will still be somewhere between 10 to 12%. 00:11:06.389 --> 00:11:15.924 Um, so while, yes, it's good, the IEEPA tariffs are gone, um, they are working their hardest to try to replace that, and so that economic drag will just come right back when they do. 00:11:17.246 --> 00:11:28.826 And this obviously creates a lot of uncertainty for people and, and this is something where, that we've talked about before our different podcast is, is not good for businesses because they, they don't really know what to do then, right. 00:11:29.684 --> 00:11:32.450 Now imagine that you're a business and you have like cargo. 00:11:32.779 --> 00:11:37.820 Coming off of a ship over the weekend, does it face the IEEPA tariff rate? 00:11:37.820 --> 00:11:40.269 Does it face a 10% section, 122 rate? 00:11:40.269 --> 00:11:43.220 Does it face a 15% section, 122 rate? 00:11:43.460 --> 00:11:52.070 There was a period of a couple days where businesses didn't know, and that can be the swing of like tens of thousands of dollars depending on how much you're trying to bring in. 00:11:52.309 --> 00:11:59.419 Um, so it absolutely undermines like the ability for businesses to plan, to make decisions, um, and then. 00:12:00.419 --> 00:12:05.279 Even when you do know what the tariff is, then you simply just know your added cost. 00:12:05.279 --> 00:12:09.269 So it's not like it's a good thing to have the tariffs in place. 00:12:09.450 --> 00:12:14.580 It's a good thing to have certainty so you can plan around it, but you're planning around an added cost. 00:12:14.789 --> 00:12:23.309 Um, so it's, it's really unfortunate that the pivot is going to be toward more tariffs rather than toward a rethink of the tariff policy itself. 00:12:24.231 --> 00:12:39.091 Then could you briefly explain maybe some of the mechanisms that Trump, so we have the IEEPA, the emergency tariffs that are, uh, struck down by the Supreme Court, which is great, but could you explain, you mentioned section 122 and maybe there's section 232. 00:12:39.111 --> 00:12:42.111 What, what mechanisms can he, is he gonna be able to pull on now? 00:12:42.975 --> 00:12:49.845 So he's going to primarily be looking at different statutes that come from the Trade Act of 1974. 00:12:50.174 --> 00:12:58.664 Um, section 122 is one that people were probably not familiar with and have, have really had to like look into lately. 00:12:59.154 --> 00:13:10.585 Section 122 allows temporary tariffs of up to 150 days at rates of up to 15% if the United States has an international payments problem. 00:13:10.914 --> 00:13:22.284 Um, so there are a couple of tests or factors that the US would have to meet in the statute, um, like a balance of payments deficit or a sudden, and like really large deterioration. 00:13:22.649 --> 00:13:31.740 Uh, of the US currency, um, either like a, a fast depreciation or a fast appreciation if, if the president was gonna take the opposite action. 00:13:32.610 --> 00:13:36.629 you look at the US economy, that's clearly not the case right now. 00:13:36.779

--> 00:13:39.929 There is no international payments problem. 00:13:40.019 --> 00:13:44.429 So we're already running into the question of are these new tariffs unlawful? 00:13:44.700 --> 00:13:45.029 Um. 00:13:46.480 --> 00:14:00.879 is likely gonna be challenged in court, but that litigation probably won't be able to play out in the next 150 days while those tariffs are scheduled to be in effect, the tariffs could extend beyond that 150 day period, but it would require congress. 00:14:01.210 --> 00:14:07.870 Approving them, and most lawmakers have already said like, no, there's not enough support in Congress to do that. 00:14:08.139 --> 00:14:23.110 So this is really a bridge to get to what the administration's going to do next, which is probably rely on some other statutes like Section 232, are National Security Tariffs section 301, which are tariffs that look at. 00:14:23.159 --> 00:14:25.740 Unfair trade practices of foreign countries. 00:14:25.919 --> 00:14:35.190 There's also section 201, and then there are the remaining, um, like anti-dumping countervailing duties that are going on on a continual basis at at the Commerce department. 00:14:35.995 --> 00:14:42.835 There, there's lots of other avenues that the president's going to use to try to recreate the broad tariffs under IEEPA. 00:14:43.254 --> 00:14:48.174 It runs into problems though, because these statutes as, as I kind of mentioned, are all narrow. 00:14:48.174 --> 00:14:52.554 They have some type of limitation, whether it's on rate or duration or scope. 00:14:52.884 --> 00:14:57.085 They require investigations, they require comment periods. 00:14:57.294 --> 00:15:00.475 Um, they require reports with findings of facts. 00:15:00.654 --> 00:15:04.674 So it's not as simple as what the president was trying to do under IEEPA. 00:15:04.875 --> 00:15:09.044 Which was a broad tariff, at any rate, on any, anyone on any product whenever he wanted. 00:15:09.434 --> 00:15:25.995 Um, we've already seen reporting that in addition to the dozen section, 232 investigations that are already underway into things like steel, autos, pharmaceuticals, semiconductors, the administration is looking at another half dozen of those investigations. 00:15:25.995 --> 00:15:34.585 So we'll likely end up with a patchwork of tariffs across all these different statutes in their attempt to recreate what they had done under IEEPA. 00:15:36.057 --> 00:15:40.111 It just, it seems like so much work for, you know, you could do something else. 00:15:40.111 --> 00:15:41.157 You could do something that's not. 00:15:41.961 --> 00:15:42.501 Tariffs. 00:15:42.562 --> 00:15:52.912 You know, this has sort of become his signature policy, but he could have a different signature policy that the time and effort and everything that's getting put in the tariffs, it, it, it feels like a bit of a waste. 00:15:53.615 --> 00:15:54.605 It's a huge waste. 00:15:54.664 --> 00:15:58.654 Uh, it's a, it's a waste in terms of the compliance and administrative costs. 00:15:58.654 --> 00:16:09.695 So we've, we've heard reports already of, you know, importers bringing in the same product at different times, um, and facing wildly different tariffs because of the interpretation of stacking order. 00:16:09.904 --> 00:16:13.565 That's likely to compound if we have an even larger patchwork of tariffs. 00:16:13.774 --> 00:16:16.475 So that's wasted time on the part of businesses attempting to. 00:16:16.784 --> 00:16:20.865 Figure out what their tax bill is when they bring something into the country. 00:16:21.164 --> 00:16:27.254 It's a waste in terms of government administration enforcing all of these very complicated tariff rules. 00:16:27.554 --> 00:16:40.125 It's a waste of lobbying as we're likely to see more firms lobbying to get their competition protected or their product protected, or get out of under tariffs if there's an input they need that they don't wanna pay tariffs on. 00:16:41.379 --> 00:16:43.330 All of it could be ended. 00:16:43.389 --> 00:16:47.950 If Congress would stand up and assert itself and say, this is enough. 00:16:48.009 --> 00:16:49.509 This has gotten too crazy. 00:16:49.509 --> 00:16:51.850 We're going to revoke these tariff powers. 00:16:52.149 --> 00:16:54.909 Um, we're going to look at reforms to the tax code, you know, to. 00:16:55.375 --> 00:17:00.625 Boost manufacturing or make us more competitive, which tariffs have very clearly failed to do. 00:17:00.955 --> 00:17:03.715 Um, but it takes an act of Congress to do that. 00:17:03.715 --> 00:17:13.375 And so right now I think we're waiting for that and it's not necessarily likely to come, but if things get, you know, bad enough, maybe, maybe that will be the incentive. 00:17:13.375 --> 00:17:15.984 Congress needs to finally pull back this power. 00:17:17.207 --> 00:17:20.596 An act of Congress or an act of God, I don't know which will come first. 00:17:20.596 --> 00:17:24.166 I mean, it's hard to say at this point who will move first? 00:17:24.227 --> 00:17:25.307 Um, yeah. 00:17:25.307 --> 00:17:32.957 You know, I, I'd like to think that this episode was going to be the, like, very optimistic, you know, like, Hey, tariffs got struck down. 00:17:32.957 --> 00:17:34.307 We've been talking about this. 00:17:34.307 --> 00:17:39.376 We've been like, but somehow still found a way for it to be a little bit pessimistic. 00:17:40.759 --> 00:17:44.750 Optimistic take is that maybe this is the push for tax reform. 00:17:45.019 --> 00:17:57.410 Uh, but the realistic take is that we know President Trump wants to impose more tariffs, and long as there are statutes there that allow him to do some form of tariff, that's, that's what he's going to use. 00:17:58.018 --> 00:18:01.063 No one can deny the man loves his tariffs. 00:18:01.182 --> 00:18:03.343 At the end of the day, he just really does. 00:18:03.403 --> 00:18:06.042 So Erica, thank you for being on today. 00:18:06.042 --> 00:18:08.198 Thank you for all the information that you've provided us here. 00:18:08.982 --> 00:18:14.982 before we sign off, I just wanna let you guys know if you have any burning questions about taxes, you can send them our way. 00:18:14.982 --> 00:18:16.962 You can drop a comment here on YouTube. 00:18:17.012 --> 00:18:20.762 You can email us at podcast@taxfoundation.org. 00:18:20.972 --> 00:18:23.553 You can slide into our dms on Twitter at Deduction Pod. 00:18:23.883 --> 00:18:25.502 And thank you for listening.