THE DEEPER DIVE: Tariff Turmoil and Tantrums
Friday was the day everything fell apart for King Donald McRonald. The Supreme Court finally got up the courage to tell the wannabe emperor he cannot declare fake emergencies and use those fakes to seize power that is not his to take. For many of us, that was always obvious. Those who understand the constitution, know that congress controls the purse strings; and those who are still rational know that trade emergencies (the ground Trump used for seizing the power of the purse) are not situations that have existed through more than half a century of flourishing trade! On Friday, the Supreme Court told the Clown King that any problem that has been fostering growth for years is not an “emergency.” It may be a problem in that things could have been even better, but it clearly is not an emergency.
We survived decades without the Trump Tariffs and even thrived more than any other nation. It is the power of congress to declare tariffs and all other taxes, except in emergency situations. Any problem we have lived with for decades can surely withstand waiting another few months for congress to work out a solution if it is that important. And, if congress does not work out a solution, that is entirely congress’s right and maybe congress’s failure. But it is on congress, and we want the nation the way it was created because we do not want kings. We fought a revolution to make that clear.
Trump more than got his hand slapped on Friday, and boy was he mad, but the whole nation will pay for the correction, just as surely as we have been paying for the cost of his truly dimwitted tariffs all along, even as he endlessly lied and said we were not. Yet, the costs are far greater than the cost of the tariffs born by Americans, and we got to see that on Friday, too.
Yes, the economic cost (not just the tax cost) to AMERICA because of Trump’s programs became abruptly apparent in other news stories on Friday, too. For all of the incumbent government’s best efforts to bury the truth about inflation for months and to keep pretending the economy is strong, even the government could not find a way to mask those truths completely any longer. GDP came in way below expectations, and inflation came in above expectations.
That is, unless you are a regular reader here; then you know these degraded economic readings have been fully expected and STILL are doctored by the government to look better than the truth for the very reasons I’ve laid out in past months, which have not gone away. It is just that the government’s methods used to mask the truth can’t make adjustments big enough to hide the ugly truth about the damage tariffs and other Trump policies are doing to American business. So, let’s dive into it:
(And right up front I’ll venture to say—lest the news should hit before I can write about it— that the president needs a big war and a big release of truth about the military’s UFO files. He now needs a huge distraction from his failure as the economic results pile in on him. He also needs and will find some great lines for blaming the Supreme Court for telling him what most of us already knew about his powers and great lines for blaming Jerome Powell for the economy Trump has done his best to destroy—an economy that wasn’t popping along as well under Biden as was claimed back then either, but that went into a nose-dive this past year, if the full truth were revealed, once Trump became king and imposed tariffs on the entire world that we, as US citizens, get to pay. So, here we go …)
Donald and the Supremes
The court sang quite a chorus on Friday, and the only discordant notes were the ones that could be counted on. Wiping out the centerpiece of the king’s economic policy in one fell swoop …
Supreme Court strikes down Trump’s sweeping tariffs, upending central plank of economic agenda
The Supreme Court struck down President Donald Trump’s far-reaching global tariffs on Friday, handing him a significant loss on an issue crucial to his economic agenda.
The 6-3 decision centers on tariffs imposed under an emergency powers law, including the sweeping “reciprocal” tariffs he levied on nearly every other country.
Interestingly, not all of Trump’s appointed justices voted in his favor. Some, however, will bend over backward to give him every power he wants, and they did so in today’s ruling. Nevertheless, a vote of six required some conservative justices to brave a stand against imperial rule.
It’s the first major piece of Trump’s broad agenda to come squarely before the nation’s highest court, which he helped shape with the appointments of three conservative jurists in his first term….
The majority found that it’s unconstitutional for the president to unilaterally set and change tariffs because taxation power clearly belongs to Congress. “The Framers did not vest any part of the taxing power in the Executive Branch,” Chief Justice John Roberts wrote.
Focus on the “any part.” It has always been entirely the power of congress to control the purse strings. The job of the president is to carry out those orders effectively. Congress writes the laws—even the ones that govern the president, except where his express powers exist and cannot be contravened by congress. Even the emergency powers he recently claimed were granted by congress.
Tariffs are taxes on Americans. Trump has had to maintain the lie that they are not in order to try to skirt the constitution, and he has tried to manufacture an emergency claim in order to gain the power to change that tax policy. The Supremes stated the obvious, and said only Americans are being assessed with those taxes. So, that is a power of congress that the president tried to grab for himself under an emergency act because he was certain congress would not do what he wanted.
Justices Samuel Alito, Clarence Thomas and Brett Kavanaugh dissented.
Of course, they did. Thomas, though appointed decades before Trump, can be counted on to vote for him because his wife is a huge MAGA Trump fan. Alito practically flies the Trump flag daily at his house, and Kavanaugh is not much of a surprise here either. What was a surprise is that two out of Trump’s three very conservative appointments voted against him because you can only stretch so far if you have any integrity at all.
“The tariffs at issue here may or may not be wise policy. But as a matter of text, history, and precedent, they are clearly lawful,” Kavanaugh wrote.
Baloney, but I’ll let the other justices answer to that rubbish.
Trump called the majority decision “a disgrace” when he was notified during his morning meeting with several governors, according to someone with direct knowledge of the president’s reaction.
Of course he did. He will bear down on them with relentless retribution, except that they are, by wise design, more untouchable than even the Fed chair is. Maybe he’ll deny their security details and encourage his followers to harass them and point at them in his next State of the Union address and shake them down with public humiliation. He’ll do everything he can to make them miserable because he’s always all about retribution. As with a mafia boss, you should work to incur his favor.
The court majority did not address whether companies could get refunded for the billions they have collectively paid in tariffs. Many companies, including the big-box warehouse chain Costco, have already lined up in lower courts to demand refunds. Kavanaugh noted the process could be complicated.
Clarity would have been nice. Instead, I guess, we can now spend a lot more time arguing in courts about whether the government can keep money when it wrongfully takes it, using powers that it does not have.
Kavanaugh noted the process could be complicated.
“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 argument,” he wrote.
It will be, but a mess is what you get when you rule like a king for an entire year by exercising powers you do not have. The Supremes finally clipped his wings. A mess is what you get when a Republican congress abrogates its own responsibilities over the purse strings and lets the president run wild, taking over congress’s own powers.
This, however, is not an abrogation of duties that started with this congress. Congress has been failing at its budgetary powers for decades—under both Republican and Democrat majorities—and has increasingly operated in the cracks between its own budgets, going from one emergency measure to another, and haphazardly shutting down parts of the government, while piling on unsustainable debts. Congress has, itself, been entirely irresponsible and an abject failure.
Knowing congress is inept, in part due to its great division (and in bigger part due to financially corrupting influences), created by the divided populace, congress has allowed the president to do what it should be doing. He was only too ready to step in and help. So, now we have a mess that is as much due to a deeply divided populace, leading to a deeply divided congress, covering years of extravagant debt spending, ceding its powers to the president who loves debt spending more than any form of finance. It’s all gone wild. Congress has failed. The president has failed, and good part of that is because of how divided the public is. So, we are a nation on the ropes, divided against itself, and President Lincoln told us where that ends up.
So, yes, fixing Trump’s overreach (and congress’s failure to reach out and stop him) is going to be a huge mess. It already is a mess, and to survey how bad it is we’ll look at the bad economic news that came in today. First, though, let’s finish up with Trump & the Supremes:
The tariffs decision doesn’t stop Trump from imposing duties under other laws. While those have more limitations on the speed and severity of Trump’s actions, top administration officials have said they expect to keep the tariff framework in place under other authorities.
Still, the decision is a “complete and total victory” for the challengers, said Neal Katyal, who argued the case on behalf of a group of small businesses.
“It’s a reaffirmation of our deepest constitutional values and the idea that Congress, not any one man, controls the power to tax the American people,” he said.
No fake emergency powers. The president has some authority over tariffs in some instances, mostly as ceded by congress, which never should have ceded its own authority. The president’s declaration of fake emergencies in order to seize all power over tariffs did not stand. He did not, however, just use the tariffs as economic policy. He also used them to strengthen his imperial rule. He used them as a baseball bat to kneecap any nation that stood against his will, especially any nation he wanted to take over and add to his empire.
The Supreme Court ruling comes despite a series of short-term wins on the court’s emergency docket that have allowed Trump to push ahead with extraordinary flexes of executive power on issues ranging from high-profile firings to major federal funding cuts.
And, in allowing those presidential decrees to stand while they are under court review, just like the full year that it allowed these tariffs, the Supreme Court is also failing Americans by letting enormous problems build up, rather than nipping them in the bud at the origin of the overreach by, at least, putting a stay on the president’s actions until the court can determine whether he has the extreme powers he is claiming in such a novel way to such a broad degree.
The Republican president has been vocal about the case, calling it one of the most important in U.S. history and saying a ruling against him would be an economic body blow to the country. But legal opposition crossed the political spectrum, including libertarian and pro-business groups that are typically aligned with the GOP. Polling has found tariffs aren’t broadly popular with the public, amid wider voter concern about affordability.
The Supreme Court allowed this nonsense to keep moving forward, rather than staying it until the court could make its decision, so the court’s very partisan approach in that regard to empowering Trump in his disregard to law is part of the problem.
While the Constitution gives Congress the power to levy tariffs, the Trump administration argued that a 1977 law [made by congress] allowing the president to regulate importation during emergencies also allows him to set import duties.
No emergency. Even the Supreme Court could have easily seen that from the get go. Practically by definition, if you’ve been running without tariffs for decades, a year to set policy through congress is not going to cause an emergency situation. Even if congress was issuing bad policy, it is their policy and their power to issue it.
Other presidents have used the law dozens of times, often to impose sanctions, but Trump was the first president to invoke it for import taxes.
The longer you let presidents take powers ceded by congress, the more they will try to take. Based on that very obvious fact about human nature, the argument by Roberts makes sense:
“And the fact that no President has ever found such power in IEEPA is strong evidence that it does not exist,” Roberts wrote, using an acronym for the International Emergency Economic Powers Act.
In other words, if such power could be in any way thought to have existed by any reasonable mind, plenty of smart presidents ahead of Trump would have seized it and exercised it!
Yet, the power play here is much bigger than just gaining power to raise revenue or with economic policy. It has been about gaining major international power as well. For example …
he imposed duties on Canada, China and Mexico, ostensibly to address a drug trafficking emergency….
The challengers argued the emergency powers law doesn’t even mention tariffs and Trump’s use of it fails several legal tests, including one that doomed then-President Joe Biden’s $500 billion student loan forgiveness program.
Moreover, with Canada, his tariff policy had far less to do with punishing drug trade across the border than it had to do with seizing Canada! Trump is not the first to rule by decree. Obama did a lot of that before Biden did a lot more. Bush did some of that before Obama. However, the more you let it run out, the further outside of the law it goes until it becomes asinine in its level of tolerated corruption. Absolute power corrupts absolutely.
The three conservative justices in the majority pointed to that principle, which is called the major questions doctrine. It holds that Congress must clearly authorize actions of major economic and political significance.
“There is no exception to the major questions doctrine for emergency statutes,” Roberts wrote. The three liberal justices formed the rest of the majority, but didn’t join that part of the opinion.
That was congress abrogating its own reponsibilities, which makes way for someone to step in and argue, “Something has to be done.”
The Trump administration had argued that tariffs are different because they’re a major part of Trump’s approach to foreign affairs, an area where the courts should not be second-guessing the president.
But Roberts, joined by Justices Neil Gorsuch and Amy Coney Barrett, brushed that aside, writing that the foreign affairs implications don’t change the legal principle.
We have moved, under Trump, far outside of operating under the law and particularly under the constitution. It is time to get fully back under that.
No kings, no fake emergencies:
“The president asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration and scope,” Roberts wrote. But the Trump administration “points to no statute” in which Congress has previously said that the language in IEEPA could apply to tariffs, he added.
As such, “we hold that IEEPA does not authorize the president to impose tariffs,” Roberts wrote.
Course correction will be rough
The correction for letting things run this far outside of constitutional control for an entire year, of course, is likely to be painful. Tax policy has been depending on this new revenue source paid into the government coffers by US citizens for a year. Even with that extra revenue, the government is already seriously underfunded due to the earlier Trump Tax Cuts and the huge spending increases cemented into place by Big Beautiful Bill.
We’re already facing another government shutdown, and suddenly the added revenue source from tariffs has been cut off, making government funding to cover government overspending—especially in Trump’s extravagant military budget increases (as necessary to support any empire)—even more problematic.
So, congress will have to quickly find ways to raise more taxes or severely cut expenses. It could vote to continue the tariffs, though they are horrible policy. Or it could vote for extreme budget cuts (reasonable policy) but not something either Democrats or Republicans have been willing to do since the Clinton-Gingrich days that more-or-less balanced the budget.
So, maybe we’ll have longer government shutdowns and more of them, as the escapists’ way to cut expenses while avoiding responsible action, as we continue to operate through provisional bills that pass half-assed budgets and live by bridging the gaps, which is no way to responsibly run a great nation. It will be great no more if that haphazard, visionless path continues. That is the path that led to this presidential overreach. Of course, the core issue is that Americans, themselves, have become deeply divided over what the country should be.
Congress will have to suddenly make up, in the very least, an additional $175-billion shortfall:
U.S. tariff revenue at risk in Supreme Court ruling tops US$175 billion, Penn-Wharton estimates
More than US$175 billion in U.S. tariff collections are at risk of having to be refunded if the U.S. Supreme Court rules against U.S. President Donald Trump‘s broad emergency tariffs, Penn-Wharton Budget Model economists said on Friday.
If that is how much was collected in a year that still ran a monstrous budget deficit, then that is how much will have to be added to this year’s revenue from another source or cut from the budget, just to maintain the same hideous deficit we already had … and that is IF the money already collected doesn’t also have to be paid back this year. If last year’s take from taxpayers has to also be paid back this year, then we have to make up double the amount this year.
It should be paid back, at least to the extent companies have absorbed the loss, but how do you pay back Americans who paid higher prices wherever companies passed the tariffs on? There is no way to track that to the damaged parties. Plenty of entities are already suing to get the tariffs they paid back. They could also try suing for damages done to their business, but they will probably not prevail in that. Bad government just comes with bad policies that cause damage, and the inability of Americans to straighten out the government is just part of the collapse of America. Maybe if we all suffer the consequences hard enough, we’ll get our heads together, but that is likely a dream, too.
The Congressional Budget Office says the actual tariff amount that would be collected over a full year (given that the amount above came in with off-and-on application of tariffs) would have been about $300-billion once the tariffs stabilized. That is likely the real size of the shortfall that will now be added to the government’s funding because congress has largely based its budgets on the CBO projections.
The fight is on
Course correction will be chaotic because Trump will rush to impose those other possible avenues of authority to raise tariffs, but those laws are temporary in their application and will allow different amounts by different methods, so that will likely force all nations that are already sick and tired of Trump back to the bargaining table to fight over what Trump wants to do to them next.
In fact, he is already trying. Trump announced on Friday evening that he has already signed a new presidential decree for a 10% global tariff (and before this Deeper Dive made it to press, he raised that to 15%). Of course, either amount falls far short of the tax revenue raised by the tariffs that were just shut down.
Trump announces new 10% global tariff after raging over Supreme Court loss
The “Section 122” tariffs will take effect “almost immediately,” Trump said in a Truth Social post.
But then …
Trump to hike global tariffs to 15% from 10%, ‘effective immediately’
Chaos is always the order with Trump, so unsurprisingly the president added …
… that as the administration works through additional legal tariff pathways, the rates imposed on individual countries may snap back to their higher levels.
I don’t know how, and the article doesn’t say; but I don’t know that finding a legal method even matters with Trump. After all, he was ordered months ago to release all the Epstein Files with the most minimal redactions possible, and we’re still waiting well past the set deadline for well over 3,000,000 pages of those files. Worse still, Trump’s bobblehead of the Dept. of Injustice has said she will never release them. By what authority she can just ignore the law to that huge degree, the Trump administration hasn’t even bothered to say because the law does not matter to them anyway. Laws are inconvenient obstacles to power.
Moreover, the files we have received are loaded with illegal redactions, according to those who actually wrote the law and who were given the ability to look past some of the redactions. Trump is a loose cannon who never cares how much he breaks the law. The mob that surrounds him and counsels him doesn’t care either. He’ll just see if the court reins him in, then try to break some other law because the Supremes have already ruled that he is legally untouchable for any official action. So, why should he care?
When asked at Friday’s press briefing why he did not want to work with the legislative branch, Trump said, “I don’t have to. I have the right to do tariffs.”
Trump’s remarks vacillated between defiant and scathing. He even went after Justices Neil Gorsuch and Amy Coney Barrett, whom he nominated, after they voted with the majority.
All totally predictable.
By the new route, Trump can impose tariffs that last only 150 days unless congress renews them. He’ll probably let them lapse for a day and then reimpose them as new tariffs. If he has to, he may even tweek a few details to claim they are new. It’s always about pushing the outside of the legal envelope as far as he can to see how much he can expand his power. He’ll always push well beyond the law and see how far the courts rein him back in, which usually buys him a lot of time to do whatever he wants. He’s constantly trying to bust beyond the bounds of his playpen, but the constitution placed the president inside of bounds for the very reason that the founders wanted no more kings forever.
Asked at the press briefing about that time limit and about getting congressional buy-in, Trump said, “We have the right to do pretty much what we want to do.”
So, there you go: Trump will still do whatever he wants—the law be damned as far as he is concerned … or, at least, confounded at every turn by a man who cannot be held criminally accountable for anything he does as a matter of official policy, including killing people in plain sight in downtown Manhattan. That is the country we have now become, thanks to the court’s earlier ruling as they courted the court jester’s favor.
He also said,
… all the tariffs active under statutes known as Section 232 and Section 301 will remain “in full force and effect.”
But Trump may go further than all of this because he also said with a vengeance, regarding any country whose tariff was just removed by the Supreme Court,
I am allowed to cut off any and all trade or business with that same country. In other words, I can destroy the trade. I can destroy the country!
I’m even allowed to impose a foreign country-destroying embargo. I can embargo. I can do anything I want.
This round will be uglier now because power-hungry Trump will seek to prove his power out of sheer spite. At the same time, all those countries he just imposed tariffs on know the last fight was over powers the president did not even have. So, they are going to wonder what they are dealing with and wonder whether whatever they finally agree to will be struck down again. So, why even engage in negotiations, especially since tariffs by this new route have to expire in as much time as the negotiations are likely to take?
Other nations are going to be so sick and tired of this guy, they will, if they are smart and and a tiny bit courageous (which Europe usually is not), just forego the bargaining table and focus all of their efforts entirely on developing trade among themselves, as China has been doing with enormous success. China turned out to be better off without the US. Business has never been so good for them since the US threw all of its trade partners into China’s welcoming arms!
You can make other nations fear you, but you cannot make them like you. You also cannot make them want to do business with you after you make them hate you. Trade alliances are already reforming, but not around the US. Away from the US!
But, hey, at least Howard Lutnik’s family firm is happy. The Lutnik family positioned themselves to bet the tariffs that Lutnik was helping to impose would be knocked out by the court as illegal. Lutnik’s family firm shorted the tariffs by purchasing the rights to the government’s reimbursements of the tariffs from businesses if the tariffs were struck down. They paid 20-30% of what the company paid out in tariffs to buy the right to their full reimbursement if it happened. So, they now stand to make 3-5 times the money, assuming courts stand by the right to return of funds that were illegally taken.
Lutnik is a crook in a nation now run by crooks more than ever! But he’ll smile at you while he takes your money. This is what strongman government under a man with no principles higher than himself delivers: Mafia rule.
“If you’re keeping track, this is the 53rd scheme by a Trump official to profit from government policy or stealing from the American tax payer,” wrote journalist Adam Cochran in a social media post on X Friday….
“For every $100 invested, Lutnick’s sons just made 3-5x,” wrote another, Kevin Paffrath, a real-estate broker and political commentator, to his nearly 400,000 followers on X. “Welcome to Crony Corrupt America.”
The correction poses a new problem for Republicans who stand by their strongman at all costs, no matter how corrupt things get (with a few recent and very late-in-coming exceptions). Many say they will legislate into being the tariffs the president did not have the authority to set, but that they always have had:
Congressional votes on tariffs will no longer be symbolic.
House Speaker Mike Johnson and Senate Majority Leader John Thune will be forced to squarely confront a deep divide in their party over tariffs.
They’ll be choosing between protecting vulnerable incumbents — and their own narrow majorities — or standing with a president whose help they’ll need in the midterms.
‘I feel vindicated’: Anti-tariff Republicans cheer as Supreme Court checks Trump….
“On its face, this case was obvious, because the Constitution vests the power to tax with the legislative branch, not the Executive branch,” Massie [the Republican sho stands on the people’s side of the Epstein Files] said in a text message. “No contrived emergency can undo that.”
A contrived emergency it was, and shame on Kavanaugh for not seeing that because he didn't want to see it. Any problem (if there even was a problem, given that Americans love cheap imports) that has existed for half a century or more can wait a few more months for congress to decide how it should be resolved, whether one likes what congress decides or not. That is the constitutional way, and the constitution never guaranteed you would like the results.
But Trump, during a news conference Friday afternoon, made clear he had no interest in engaging Congress further on the matter. In announcing his plans to slap a new “10% global tariff” on goods coming into the U.S., Trump said he would not ask lawmakers to take additional action: “I don’t need to. It’s already been approved. I mean — I would ask Congress and probably get it.”
He added, “I have the right to do tariffs. And I’ve always had the right to do tariffs.”
Lots more chaos to come! Always great for the economy. (Sarcasm detector still on?)
Now, we’ll go on to look, as I promised, at how truly and deeply bad tariffs and other Trump policies have been for the economy, which finally busted out in the open on Friday, too. The financial news was far worse than expected, yet the reality is still worse than reported. Tariffs and other strategies have been an economic bomb to the US:
