The Supreme Court decision is not random. I discuss a framework.
There are 9 Supreme Court Justices. For the reciprocal case, they breakdown into three groups.
Liberal Justices – Nearly Certain to Vote Against Trump
- Sonia Sotomayor
- Elena Kagan
- Ketanji Brown Jackson
Staunch Trump Supporters
- Samuel Alito
- Clarence Thomas
- Brett Kavanaugh
Swing Votes for This Case
- John Roberts
- Amy Coney Barrett
- Neil Gorsuch
Neil Gorsuch, Brett Kavanaugh, and Amy Coney Barrett were appointed by Trump.
Key Players
- For Trump: GEN. D. JOHN SAUER, Solicitor General, Department of Justice, Washington, D.C.; on behalf of the federal parties.
- Private Parties: NEAL K. KATYAL, ESQUIRE, Washington, D.C.; on behalf of the private parties.
- On Behalf of Oregon: BENJAMIN GUTMAN, Solicitor General, Salem, Oregon; on behalf of the state parties.
Background
The en banc (full) appeals court ruled against Trump’s reciprocal tariffs 7-4. Trump appealed to the Supreme Court.
On August 27, before the en banc ruling let’s recap how I sized up the Reciprocal Tariff Case.
Hypothetical Vote Count
The three liberal justices are certain to vote against Trump. That means we need two more.
Pair 1: Barrett and Roberts
Pair 2: Barrett and Gorsuch
Pair 3: Gorsuch and RobertsIf I am correct, I think Barrett is already on board. I can’t help but think Roberts will go with the majority, and perhaps decide.
If it’s pair 2, add Roberts for a 6-3 decision. The bigger the majority, the more cover for all of them.
So expect an appeals court ruling against Trump. Then we will see if common sense, precedent, major questions, and emergencies apply to Republican presidents as well as Democrats.
Oral Arguments
The Supreme Court heard Oral Arguments on Wednesday, November 5. I read all 213 pages multiple times. The snips that follow are the key points.
Note: “General” is a reference to JOHN SAUER, Solicitor General on behalf of Trump.
What the Case Hinges On
- Major Questions
- Delegation of Powers
JUSTICE GORSUCH: I want you to explain to me how you draw the line, because you say we shouldn’t be concerned because this is foreign affairs, the President has inherent authority, and so delegation off the books more or less. And if that’s true, what would — what would prohibit Congress from just abdicating all responsibility to regulate foreign commerce, for that matter, declare war to the President?
GENERAL SAUER: We don’t contend that he could do that. If it did —
JUSTICE GORSUCH: Why not?
GENERAL SAUER: Well, because we’re dealing with a statute, again, that has a whole list of limitations.
JUSTICE GORSUCH: I’m not asking about the statute. General, I’m not asking about the statute. I’m asking for your theory of the Constitution and why the major questions and nondelegation, what bite it would have in that case.
GENERAL SAUER: Yes. I would say by then you would move from the area where there’s enormous deference to the President in actually both the political branches, where, here, there’s inherent authority, and pile on top of that there’s a broad delegation of the duty and —
JUSTICE GORSUCH: You’re saying there’s inherent authority in foreign affairs, all foreign affairs, so regulate commerce, duties and — and — and — and tariffs and war. It’s inherent authority all the way down, you say. Fine. Congress decides tomorrow, well, we’re tired of this legislating business. We’re just going to hand it all off to the President. What would stop Congress from doing that?
GENERAL SAUER: That would be different than a situation where there are metes and bounds, so to speak. It would be a wholesale abdication.
JUSTICE GORSUCH: You say we — we — we are not here to judge metes and bounds when the foreign affairs. That’s what I’m struggling with. You’d have to have some test. And if it isn’t the intelligible principle test or something more — with more bite than that, you’re saying it’s something less. Well, what is that less?
GENERAL SAUER: I think what the Court has said in its opinions is just that it applies with much less force, more limited application in this context.
JUSTICE GORSUCH: All right. So now you’re admitting that there is some nondelegation principle at play here and, therefore, major questions as well, is that right?
GENERAL SAUER: If so, very limited, you know, very, very deferential — and limited is what — and, again, the phrase that Justice Jackson used is it just does not apply, at least
JUSTICE GORSUCH: I know, but that’s where you started off, and now you’ve retreated from that as I understand it.
GENERAL SAUER: Well, I think we would as our frontline position assert a stronger
position, but if the Court doesn’t accept it, then, if there is a highly deferential version –
JUSTICE GORSUCH: Can you give me a reason to accept it, though? That’s what I’m struggling and waiting for. What’s the reason to accept the notion that Congress can hand off the power to declare war to the President?
GENERAL SAUER: Well, we don’t contend that. Again, that would be —
JUSTICE GORSUCH: Well, you do. You say it’s unreviewable, that there’s no manageable standard, nothing to be done. And now you’re — I think you — tell me if I’m wrong. You’ve backed off that position.
GENERAL SAUER: Maybe that’s fair to say.
JUSTICE GORSUCH: Okay. All right. Thank you. (Laughter.)
GENERAL SAUER: Because that would be, I think, an abdication. That would really be an abdication, not a delegation.
JUSTICE GORSUCH: I’m delighted to hear that, you know. Okay. All right. And then I wanted to return to something Justice Sotomayor asked under this statute, okay, so now we’re in this statute. It’s a major questions question, though. Could the President impose a 50-percent tariff on gas-powered cars and auto parts to deal with the unusual and extraordinary threat from abroad of climate change?
GENERAL SAUER: It’s very likely that that could be done, very likely.
Mish Interjection: Sauer just admitted to Justice Gorsuch that the president could impose a 50-percent tariff on gas-powered cars and auto parts to deal with the unusual and extraordinary threat from abroad of climate change. Is that what you want?
GENERAL SAUER: [Long hard to understand rant]
JUSTICE GORSUCH: General, if I can cut through those words, I think you’re saying that, no, the President doesn’t have inherent authority over tariffs in peacetime. GENERAL SAUER: Absolutely. That is — We do not assert that. We say that Congress can delegate that to him. And when Congress does so, as it does when it uses the frayed — phrase “regulate importation” —
JUSTICE GORSUCH: Okay. You emphasize that Congress can always take back its powers. You mentioned that a couple of times. But don’t we have a serious retrieval problem here because, once Congress delegates by a bare majority and the President signs it — and, of course, every president will sign a law that gives him more authority — Congress can’t take that back without a super majority. And even — you know, even then, it’s going to be veto-proof. What president’s ever going to give that power back? A pretty rare president. So how — how should that inform our view of delegations and major questions?
GENERAL SAUER: I would look at the balance that Congress struck because what Congress did, initially, it had a two-House legislative veto that was held unconstitutional in Chadha —
JUSTICE GORSUCH: And we struck that down, yeah.
GENERAL SAUER: — and then Congress went back to the statute and amended it.
JUSTICE GORSUCH: Fair enough. As a practical matter, in the real world, it can never get that power back.
GENERAL SAUER: I disagree because, in January of 2023, Congress voted to terminate one of the biggest IEEPA emergencies ever, the COVID emergency, and the President went along with that.
JUSTICE GORSUCH: But what happens when the President simply vetoes legislation to try to take these powers back?
GENERAL SAUER: Well, he has the authority to veto legislation to terminate a national emergency, for example. I mean, he retains the powers in the background because IEEPA is still on the books, but if he declares an emergency and Congress doesn’t like it and passes a joint resolution, yes, he can absolutely veto that. Congress was —
JUSTICE GORSUCH: Yeah. So Congress, as a practical matter, can’t get this power back once it’s handed it over to the President. It’s a one-way ratchet toward the gradual but continual accretion of power in the executive branch and away from the people’s elected representatives.
Mish Interjection: Gorsuch is very concerned, and rightfully so, of Congress giving away its Constitutional authority, even if that was the intent. In this case, Congress did not have intent.
INTENT
JUSTICE BARRETT: General Sauer, can I just ask you a question? Can you point to any other place in the Code or any other time in history where that phrase together, “regulate … importation,” has been used to confer tariff-imposing authority? GENERAL SAUER: Well, as to “regulate importation”? That was held in TWEA. So, obviously — and that’s —
JUSTICE BARRETT: Okay. Okay. So an intermediate appellate court held it in TWEA, but you just told Justice Kavanaugh that wasn’t your lead argument, that your lead argument was this long history of the phrase “regulate … importation” being understood to include tariff authority. So my question is, has there ever been another instance in which a statute has conferred — used that language to confer the power? Putting aside Yoshida.
GENERAL SAUER: I mean, obviously, the other statutory example is just imports. The cases we rely on are cases where, for example, in Gibbons against Ogden and Justice Story’s treatise there —
JUSTICE BARRETT: But that just shows the word can be used that way. None of those cases talked about it as conferring tariff authority. I understood you to be citing McGoldrick and Gibbons and those cases just to show that it’s possible to say that “regulating commerce” includes the power to tariff.
GENERAL SAUER: I think — I think our argument goes a bit further than that as an interpretive matter because, if you look at that history, the history of delegating —
JUSTICE SOTOMAYOR: Could you just answer the Justice’s question?
JUSTICE BARRETT: Can you identify any statute that used that phrase to confer tariff —
GENERAL SAUER: Yeah, the only two statutes I can identify now are TWEA as interpreted in Yoshida and then closely related, not “regulate importation” but “adjust imports” in Section 232 in —
JUSTICE BARRETT: Well, I think “adjust imports” is differently. So the answer is the contested application in TWEA and then now in IEEPA?
GENERAL SAUER: And then, of course, I mean, those are — there’s a sort of direct line there — [… … …] Start with sort of the grammatical structure of the statute, then refer to the other statutes. “Regulate importation,” you put those two words in combination, that’s — the inference from that is, you know, the founders discussed with this sort of, like, you know, “as everyone knows” attitude, “regulate importation” then, one of the most natural applications of that is the power to tariff. So, when Congress confers the power to regulate imports, it is naturally conferring the power to tariff, which it has delegated to the executive branch, you know, again and again and again going back to the country’s origins.
JUSTICE SOTOMAYOR: I’m sorry, counsel, it doesn’t say “regulate tariffs.” It says “regulate importations and exportations.” You agree that they can’t put tariffs — taxes
on exportations constitutionally?
ENERAL SAUER: Right. Understand. Yeah, we agree to that, yes.
JUSTICE SOTOMAYOR: All right. So why should we think that it’s natural then to think that “regulate importation” includes taxing importations?
GENERAL SAUER: Because that is how —
JUSTICE SOTOMAYOR: It’s in the conjunctive, “importations and exportations.”
If they can’t do it with respect to import — exportations, why are we permitting them to do it with respect to importations? [… … …]
JUSTICE BARRETT: Okay. Then a question just to follow up on Justice Gorsuch’s
thing about how could Congress ever get this delegation back, you said, well, listen, you point to the — Congress’s ability to terminate emergencies, which it’s done. But, if Congress ever wanted to get the tariffing power back, it would have to have a veto-proof majority because, regardless of the emergency, so if Congress wanted to reject the — let’s say that we adopt your interpretation of the statute. If Congress said, whoa, we don’t like that, that gives a president too much authority under IEEPA, it’s going to have a very hard time pulling the tariff power out of IEEPA, correct?
GENERAL SAUER: Well, I don’t know if it wouldn’t be a hard time. Certainly, we’d have to have a statutory amendment —
JUSTICE BARRETT: Well, veto —
GENERAL SAUER: — which would be true of any case this Court definitively interprets the statute, yes, I think that the Court — Congress have to pass a statutory —
JUSTICE BARRETT: But — but definitively interpreting a statute that grants presidential power makes it particularly hard to get the President to not want to veto something, which, as Justice was pointing out — Justice Gorsuch was pointing out, has him lose power. All right. I want to ask you a question about unusual and extraordinary threat, which we have not talked about yet, and I specifically want to talk about the reciprocal tariffs. These are imposed on — I mean, these are kind of across the board. And so is it your contention that every country needed to be tariffed because of threats to the defense and industrial base? I mean, Spain, France? I mean, I could see it with some countries, but explain to me why as many countries needed to be subject to the reciprocal tariff policy as are.
GENERAL SAUER: Yeah. Executive Order 14257 spells out the nature of the emergency and basically says that there’s this — this sort of lack of reciprocity, this asymmetric treatment, you know, our trade with respect to foreign countries, trade that does run across the board is a global problem.
JUSTICE JACKSON: Let me just ask one more question about the unusual threat. So, in your conversation with Justice Gorsuch that we had, the climate change tariff hypo and you indicated that there would be challengers to the notion that that was an unusual and extraordinary threat, and I’m just wondering, under your position, would they be able to make a legal challenge? Are you saying the Court would not be able to review that concern? GENERAL SAUER: On that particular hypothetical, I think I said that would be a question for Congress.
JUSTICE JACKSON: So not a court?
GENERAL SAUER: Yeah. I don’t — in other words, that wouldn’t be the sort of thing the courts are going to weigh into, is this really an emergency. You know, that would not be — probably very unlikely. That would be a situation where at least there would be very, very, very deferential judicial review of that kind of determination, a legal dispute, but —
JUSTICE JACKSON: No, I’m asking you — right. Those are two different things. Is there no judicial review or is there deferential judicial review?
GENERAL SAUER: Our front line — I mean, Trump against Hawaii, our front-line position is that it falls within Dalton against Specter, it’s committed at the President’s discretion when he makes his determination of a national emergency, but the Court doesn’t have to decide that because whatever review is very, very deferential and it’s here.
ORAL ARGUMENT OF NEAL K. KATYAL ON BEHALF OF THE PRIVATE PARTIES
MR. KATYAL: Thank you, Mr. Chief Justice, and may it please the Court: Tariffs are taxes. They take dollars from Americans’ pockets and deposit them in the U.S. Treasury. Our founders gave that taxing power to Congress alone. Yet, here, the President bypassed Congress and imposed one of the largest tax increases in our lifetimes. Many doctrines explain why this is illegal, like the presumption that Congress speaks clearly when it imposes taxes and duties and the Major Questions Doctrine. But it comes down to common sense. It’s simply implausible that in enacting IEEPA Congress handed the President the power to overhaul the entire tariff system and the American economy in the process, allowing him to set and reset tariffs on any and every product from any and every country at any and all times. And, as Justices Gorsuch and Barrett just said, this is a one-way ratchet. We will never get this power back if the government wins this case. What President wouldn’t veto legislation to rein this power in and pull out the tariff power? IEEPA is a sanction statute. It’s not a tax statute where Congress gave away the store. Congress knows exactly how to delegate its tariff powers. Every time for 238 years, it’s done so explicitly, always with real limits. IEEPA looks nothing like those laws. It uses “regulate,” which Congress has used hundreds of times, never once to include tariffs. And it lacks the limits of every other tariff statute. And that is why, even though presidents have used IEEPA to impose economic sanctions thousands of times, no president in IEEPA’s 50-year lifetime has ever tried to impose tariffs. And the President bypassed statutes that do address tariffs, like Section 122 for large and serious trade deficits, but that imposes a clear guardrail, 15 percent cap, 150-day limit. This is Youngstown at its lowest ebb. If the government wins, another president could declare a climate emergency and impose huge tariffs without fines or — without floors or ceilings, as Justice Gorsuch said. My friend’s answer? This administration would declare it a hoax. The next president may not quite say that. This is an open-ended power to junk the tariff laws and is certainly not conveyed by the — by the word “regulate.” I welcome the Court’s questions.
JUSTICE THOMAS: Let’s go back to your nondelegation point. It would seem that if it’s — if the power, tariff power, cannot be delegated, your argument on nondelegation would also have to apply to embargoes and to quotas.
MR. KATYAL: No, Your Honor, because I think tariffs, because they’re uniquely revenue-raising, impose special unique concerns that go back to our founding. And so I don’t think that they apply to embargoes. And, indeed, the history of this is very — very clear. As you just heard my friend say, in 1790, George Washington was delegated massive embargo power from the Congress. But what did Congress not do? And this is why the example cuts the other way. They never gave the President any sort of delegation of tariff authority at the time. Our point is not you can’t delegate tariff authority. It’s simply that you’ve got to do so with intelligible principles. And what you just heard my friend say is every single limit in IEEPA is one that is not judicially enforceable, there’s no limit whatsoever, and, indeed, the main limit that was in there — he calls this some compromise position — the only compromise in 1977 was the legislative veto. And, as this case comes to the Court, that’s no longer in the statute at all. So —
CHIEF JUSTICE ROBERTS: Counsel, you — yes, sure, the tariffs are a tax and that’s a core power of Congress. But they’re a foreign-facing tax, right? And that — foreign affairs is a core power of the executive. And I don’t think you can dismiss the consequences. I mean, we didn’t stay this case. And one thing is quite clear, is that the foreign-facing tariffs — tariffs have in several situations been quite —
On Paying Back the Tariffs
JUSTICE BARRETT: And then if you win, tell me how the reimbursement process would work. Would it be a complete mess? I mean, you’re saying before the government promised reimbursement. And — and now you’re saying, you know, well, that’s rich, but how would this work? It seems to me like it could be a mess.
MR. KATYAL: So the first thing I would say is that just underscores how major a question this is, the very fact that you are dealing with this with quotas, there’s no refund process of — to the tunes of billions of dollars or embargoes, but there is here. But for our case, the way it would work is, in this case the government’s stipulated for the five plaintiffs that they would get their refunds. So for us that’s how it would work.
Your question, I take it, is about everyone else. We don’t have a class action or anything like that. With respect to everyone else, there’s a whole specialized body of trade law. And 19 U.S.C. 1514 outlines all these administrative procedures. It’s a very complicated thing.
Mish Interjection: Admitting it was necessarily a complicated mess was a mistake. The tariffs were collected and receipts issued. Although it would take a while, conceptually the process should be simple. But the big point Katyal made is that complications show this is a “major question” issue. He recovered …
JUSTICE BARRETT: So a mess.
MR. KATYAL: We don’t — we don’t deny that it’s difficult, but I think what this Court has said in — in — in the McKesson case in 1990, a serious economic dislocation isn’t a reason to do something.
Mish Interjection: In the next set of questions, Sotomayor is clearly throwing Katyal some softballs.
JUSTICE SOTOMAYOR: I’m fascinated that the two instances where presidents have used their war powers to impose a tariff, Lincoln and Nixon, that Congress found it necessary to ratify their actions and that the court in both those cases, the intermediate court of appeals in Nixon and our own Court, included that as part of their reasoning as justifying the use of war power in that situation. So I’m a little concerned why the fact that this Act, a domestic Act on emergency, that uses a word, a general word, like “regulate” should take on a war powers meaning when, in every other situation, whenever Congress intended domestic tax — taxation, it said “tax” and “regulate.”
MR. KATYAL: Justice Sotomayor, I wish I had an hour to talk about this with you because this is just — this argument by the government, advanced in their reply brief, is wrong, you know, every which way. So —
JUSTICE SOTOMAYOR: I’m saying that’s another — that’s your sixth way of differentiating Yoshida,
MR. KATYAL: So it’s a war powers case. It’s about conquered territory. It has nothing to do whatsoever with domestic tariffs. And absolutely, you’re right in saying that the way that court even in those cases, even at the height of the government’s power, war powers, they said Congress had to ratify it. And that’s what at page 96 it was
JUSTICE SOTOMAYOR: And that hasn’t happened here.
MR. KATYAL: And that has not happened here, not even close. JUSTICE SOTOMAYOR: Well, it might not with Congress closed, but — they can’t even think about it right now. (Laughter.)
ORAL ARGUMENT OF BENJAMIN GUTMAN ON BEHALF OF THE STATE PARTIES
MR. GUTMAN: Mr. Chief Justice and may it please the Court: I’d like to begin by picking up with the exchanges with Justice Barrett and Justice Gorsuch about licenses and license fees, because I think we ended on the right note, but I just wanted to make sure that our — that at least my client’s position is clear on this. Licenses are different from license fees, and I am not aware of any history in the five decades that IEEPA has been in force of any fees charged for the licenses under this statute. This is a statute that — licenses can be used, for example, the President might ban certain transactions with a foreign country but then grant licenses to do them for humanitarian reasons, but, as far as I’m aware, there’s never been a fee charged for that. And I — I do welcome the Court’s questions, but I think that’s — I just want to make — [… … …]
JUSTICE SOTOMAYOR: And so there is something — it’s just not the taxing power, qua taxing power. The question is, do we permit the President to use the taxing power to effect his personal choices of what is good policy for me to pay for?
MR. GUTMAN: That’s exactly right. The question is two sides.
JUSTICE SOTOMAYOR: It hasn’t — who decides and under what circumstances. Now, with respect to this, I — I’m not even going to the pretext argument, okay?
But the President threatened to impose a 10 percent tax on Canada for an ad it ran on tariffs during the World Series. He imposed a 40 percent tax on Brazil because its Supreme Court permitted the prosecution of one of its former presidents for criminal activity. The point is, those may be good policies, but does a statute that gives, without limit, the power to a President to impose this kind of tax, does it require more than the word “regulate”?
MR. GUTMAN: Exactly.
JUSTICE SOTOMAYOR: That’s your point.
MR. GUTMAN: Yes.
Mish Interjection: Now it’s Gorsuch throwing Gutman some softballs.
JUSTICE GORSUCH: So I just want to follow up on Justice Sotomayor’s question at the end of a long morning — afternoon. It does seem to me, tell me if I’m wrong, that the really key part of the context here, if not the dispositive one for you, is the constitutional assignment of the taxing power to Congress, the power to reach into the pockets of the American people is just different and it’s been different since the founding and the navigation acts that were part of the spark of the American revolution, where Parliament asserted the power to tax to regulate commerce. Some of those were revenue-raising. Some of them didn’t raise a lot of revenue.
Isn’t that really the major questions nondelegation now, whatever you want to describe it, isn’t that what’s really animating your argument today?
MR. GUTMAN: I think it’s a huge piece of what’s animating our argument. Thank you.
So How Do We Calculate the Odds?
Let’s stary with the Gorsuch- Barrett pair. After reading through all of the oral arguments several times, I believe the odds of Gorsuch voting for trump is only 30 percent or so. The same applies to Barrett.
The straight math would be 0.3 * 0.3 = 9 percent. The problem is Barrett and Gorsuch are not truly independent. This is not a coin flip setup where each flip is independent.
They will hash out all of the arguments. If one ultimately decides a certain way for whatever reason, the other is more likely to come to the same conclusion.
I posed questions to Grok and it created the Pearson correlation ρ for binary votes as shown below.
Now plug in plausible ρ values (based on SCOTUS deliberation dynamics):
| Correlation ρ | Intuition | P(both pro-Trump) |
|---|---|---|
| 0.0 | Independent | 9.0% |
| 0.3 | Mild shared lean | 0.09 + 0.063 = 15.3% |
| 0.5 | Moderate (discuss, influence) | 0.09 + 0.105 = 19.5% |
| 0.6 | Strong but realistic | 0.09 + 0.126 = 21.6% |
| 0.7 | Very strong alignment | 0.09 + 0.147 = 23.7% |
| 1.0 | Perfect lockstep | 30.0% (max) |
The straight math if Gorsuch and Roberts were each only 0.3 probability would yield a mere 9 percent chance.
But they are not independent votes. In practice they will influence each other to some degree or alternatively come to the same conclusions for reasons we cannot now foresee.
Importantly, It’s not just Gorsuch and Barrett in play. It’s Gorsuch, Barret, and Roberts in play. Roberts’ mission is to get a big a consensus as possible,
He will strive for 6-3 or more if he can get it. He will not want to be the deciding 5-4 vote.
More Than 6-3? Which Way?
Yes, > 6-3 is possible. Recall that the case hinges on two things: Major questions and Delegation of powers.
For Trump to succeed he must win both of those. Of Barrett, Roberts, and Gorsuch, if any two of them side against Trump on either Major Questions or Delegation then Trump loses.
It’s possible one of the staunch Trump supporters on the court, say Kavanaugh, will pick one of those reasons but side with Trump on the other. Kavanaugh might easily be the 7th vote.
And it’s far more likely that one of Kavanaugh, Alito, or Thomas votes against Trump than Sotomayer, Kagan, or Brown votes for Trump.
Note that far more likely does not mean likely. It’s more like 2% that Sotomayer, Kagan, or Brown votes for Trump vs 20% that Kavanaugh, Alito, or Thomas votes against Trump for any reason.
So the tilt away from 6-3 to higher numbers is one-way, against Trump.
It would be a hoot if all three Trump appointees, Gorsuch, Kavanaugh, and Barrett voted against Trump. That is not at all far fetched and Roberts will strive for that if he can get it.
Bottom Line
The key reason the odds are not lower for Trump is the votes are not independent.
A secondary reason is that although we can see the oral arguments, we cannot be certain those arguments is what the case will hinge on.
Note that Polymarket currently has Trump’s odds of winning at 24 percent. Those odds crashed on the oral arguments.
And 24 percent roughly matches the logic I presented above.
Meanwhile, Trump is fuming like he believes he will lose.
For discussion, please see Trump’s bizarre tariff rants discussed in What Should We Make of the Biggest Trump Tariff TACO Yet?
Footnotes
There are a few things I meant to discuss, especially about Roberts.
He is concerned about his legacy as Chief Justice. More importantly he is concerned about the integrity of the court.
By that I mean Roberts does not want a constitutional battle with Trump. So he will not want to be the deciding vote.
Importantly, this is not a for-against Trump vote. This is a serious set of issues. And there are three of them, not two that I mentioned above.
- Did Congress delegate tariffs to the Executive?
- Can Congress delegate tariffs to the Executive?
- IF yes to both of those, then does the amount create a major questions issue?
Gorsuch and Barrett strongly questioned Sauer on points 2 and 3.
Barrett also questioned Sauer on point 1.
Roberts asked pointed questions each way. Perhaps this means he is prepared to go either way even if he strongly wants to vote against Trump. Perhaps it means nothing at all.
Question 2 is a strong constitutional question. Gorsuch and Barrett both seemed firm with questions on how once delegated, could Congress ever get pack powers ceded to the executive.
In essence, the set of three questions above is about the integrity of the constitution and separation of powers. Gorsuch and Barrett are clearly very concerned.
Yet, even IF a majority is willing to side with Trump on points 1 and 2, Trump still needs to survive point 3, the major questions issue.
And it was the major questions issue that sunk Biden’s student loan forgiveness ploy. Trump’s boast making this a $2 or $3 trillion collection does not help his own case! See What Should We Make of the Biggest Trump Tariff TACO Yet? for Trump’s claims and further discussion.
In summation, Trump needs to win on three of three issues (on two of three of Barrett, Roberts, and Gorsuch, while holding all of Thomas, Alito, and Kavanaugh).
I am unconvinced on Kavanagh. And that is how you get to 7 or more votes against Trump.
So, I actually believe the betting markets are a bit high. Call it 85 percent likely this goes against Trump.
Correction
In two places I said “delegation of powers”. Corrected to “delegation of duties”.
Nimesh: “It does not matter what the Supreme Court decides.President Trump can ignore the Supreme Court and continue on with the tariffs. ”
Mish: Actually it does. And I laid out that case in a long footnote.
While it’s true that Trump could try to ignore the Court, the bigger the margin, the less likely that would be.
He could easily get impeached and probably would.
In a 7-2 margin would Trump even try?
Besides, Trump would likely be grateful to have something to moan about. Think about that.
“THE ECONOMY WOULD BE GREAT WERE IT NOT FOR THE STUPID SUPREME COURT!!!!!! WE WERE WINNING BIG!! THANK YOU FOR YOUR ATTENTION”
Trump will be happy to have someone to blame. And he has other means of stupid tariffs to fall back on.
Never wrong never his fault.
Psychopathy seems to be a lifelong trait, or combination of traits, which are heavily influenced by genes and hardly at all by social upbringing.
The two defining characteristics of psychopaths, blunted emotional response to negative stimuli, coupled with poor impulse control, can both be measured in psychological and neuro-imaging experiments. They do not seem to process heavily loaded emotional words, like “rape”, for example, any differently from how they process neutral words, like “table”. This lack of response to negative stimuli can be measured in other ways, such as the failure to induce a galvanic skin response (heightened skin conduction due to sweating) when faced with an impending electrical shock..
The psychopath really just doesn’t care. In this, psychopaths differ from many people who are prone to sudden, impulsive violence, in that those people tend to have a hypersensitive negative emotional response to what would otherwise be relatively innocuous stimuli.”
Craig, M., Catani, M., Deeley, Q., Latham, R., Daly, E., Kanaan, R., Picchioni, M., McGuire, P., Fahy, T., & Murphy, D. (2009). Altered connections on the road to psychopathy Molecular Psychiatry, 14 (10), 946-953 DOI: 10.1038/mp.2009.40
agree. there is a wonderful book, “the sociopath next door”. if memory serves they believe about 4% or so, human primates are sociopaths. they all seem to know they are different, and learn to act, to fit in.
See Above
– Psychopath > Not even close! First and foremost, “The Absence of Empathy” is a primary characteristic, of which Trump has a great amount of. Nobody could hang that characteristic on Trump. His entire MAGA Movement is 100% based on empathy for the American Citizen. While not necessary to point out, but they also tend to be “Antisocial” of which Trump is obviously Not!
– sociopath > Even further away… This is associated with antisocial personality disorder (ASPD), again, which Trump is farther away from than He is from Pluto! They also have disregard for others to a large extent, of which Trump isn’t even close. Everything Trump is trying to accomplish, is for the “GOOD” of Others! Primarily they often wind up in behaviors that are harmful, and with No Remorse. Another trait that cannot be associated with Him.
While these characteristics don’t apply to Trump, some will scream about Politics, but that would be silly. Politics are accomplished by literally 100’s of People of all walks of life, and representing all sorts of people. Neither condition could be possible in Politics to any great degree, as it’s not a solo position, but one with all sorts of checks and balances, which don’t work at all with such issues. It’s a One Ruler, as in Dictator Trait for certain, and you could look at China, and Russia for several examples…
Mish some interesting articles ive stumbled across recently. You may find interesting.
Podcast/ big picture science. Good solar episode nov 9
Business insider/ ford ceo says taking apart tesla and Chinese evs was ‘shocking’ and pushed him to shake up the automaker. Nov 11 tom carter.
Thanks – Pretty much what Farley said in June
Ford CEO: China’s EV Costs, Tech, and Quality “Far Superior” to the West
https://mishtalk.com/economics/ford-ceo-chinas-ev-costs-tech-and-quality-far-superior-to-the-west/
The regime change king proxies will impeach Trump: bs. Trump can impose an emergency rule and run the US with an iron fist. The fisa court gang will go to jail.
Oh boy! I bet the Administration is getting a Generally Sour (!) taste in it’s mouth. So this is what they Top Gun lawyer has to say: “Congress confers the power to regulate imports, it is naturally conferring the power to tariff, which it has delegated to the executive branch, you know,”?
No, Sourpuss, we don’t know.
If only “someone” hadn’t mouthed off about the “External Revenue Agency”. Now the only plan B for Trump is to swallow Graham’s boner and sign the anti Russia Act.
“Its proposed measures include a 500% tariff on imports from nations buying Russian oil, natural gas, petroleum products, or uranium.” Everyone buys Russian uranium (because it rocks), including USA! In 2024, the US imported $624 million worth of enriched uranium and plutonium from Russia.
Great work Mish!
If Trump tariffs are stricken down, this country is toast. The USA will get a credit rating downgrade, and long term treasury yields will be pushed up at least 20 basis points. The funding for the OBBBA was predicated on tariffs. Without that funding, the USA is setting foot on a side path, headed towards a hyperinflationary house of cards.
Hahahaha!
Care to explain that?
Don’t ask – It’s total lunacy
LOL! I want an apology when the US credit downgrade happens next year.
Come back to this thread, we’ll be here
I thought it was self explanatory, but sure, no problem:
https://taxfoundation.org/blog/obbba-largest-tax-cut-in-american-history/
“”The tariffs will offset a portion of the OBBBA tax cut provisions, resulting in a net revenue reduction of $2.6 trillion from 2025 through 2034, or 0.73 percent of GDP. ” … “The OBBBA also included reductions in government spending, offsetting about $1.1 trillion of the deficit impact.”
So, yeah, the tariffs are, by far, the major offset to the OBBBA tax breaks, as projected by the CBO.
Add this to the already ludicrous fiscal spending (federal deficit spending north of 6% of GDP in an already hot, financially loose economy), and it pushes US finances into the “severely untenable” zone.
More… a *direct* quote from the CBO:
“We project that increases in tariffs implemented during the period from January 6, 2025, to August 19 will decrease primary deficits (which exclude net outlays for interest) by $3.3 trillion if the higher tariffs persist for the 2025‒2035 period.”
So wouldn’t the logical solution be to cancel the tax cuts for the wealthy in OBBBA?
Absolutely. Will it happen though? Not a chance. And to clarify, the OBBBA mostly just preserved the TCJA tax cuts that were set to expire. They should have let the expiration occur, just like they allowed the enhanced ACA premium subsidies expire recently.
If only Congress had authorized the President to create tariffs in the OBBB he wouldn’t have this problem with the Supreme Court. This being the lynchpin to avoiding hyperinflation, one would think at least one Republican Congressman or Senator would have tried to include it in the bill! Oh well, I guess we deserve what we are going to get for our votes.
The funny part is that the Tariffs collected are insignificant. When refunded to the importing companies they are a bit of a windfall. The end consumer gets nothing.
Legal or primarily illegal, taco will likely find a way to get what he wants, regardless of whoever is harmed or destroyed, As a friend’s young grandson said after watching taco on TV: this is a “bad man.”
Trump is a perfect reflection of a crumbling very evil empire. pax dumbfuckistan has been bombing poor people on the planet for daring to trade with countries we don’t allow them too. democracy works. trump is amerikan as apple pie. i keep telling my friends to read republic, penned by plato and socrates……..over 3000 years ago. short version. democracy works. don’t do it with a city/state of assholes. amerikans are assholes. and elect themselves. the ugly truth.
After Xue Jian threatened to behead Japan female pm, 83% of of the people in Japan support protecting Taiwan if China invades Taiwan. Centrifugal forces are breaking China apart. China blames Japan. China needs an enemy. Without one they cannot survive. China gutter behavior helps Japan PM to boost its defense budget and revise the constitution. If China invades Taiwan and rules the South China Sea, China can block oil shipments to: S. Korea, Japan, Indonesia, and the Philippines….
The Seventh fleet didn’t sail in China South Sea in 2025.
Off topic but the private equity markets continue a repeat of the housing subprime GFC mess. Blue Owl halting redemptions and forcing structural changes.
https://www.youtube.com/watch?v=NplEmGBY7kQ
Counter-party risk is increasing exponentially and this usually leads to credit and liquidity crisis. Won’t surprise me if we have a black swan event out of this right before midterms 😉
I say 85% chance Trump loses. It would be interesting if he won, but not good. The executive is supposed to execute the law, not make it. Way too much power has been handed to the executive branch. It would be tough for Congress to repeal the laws Trump is using as his basis for the tariffs. They’d need a veto-proof majority. And future presidents would also not want their powers pared back.
The winner, if Trump loses this case, is China. Draw your own conclusions.
1 out of 30 MWS pseudo intellectuals.
Disagree. Trump is forcing China to focus growth outside of the US. That forces Chinese industry to be even more competitive. And tariffs make US industry less competitive internationally. The tariffs + loss of confidence in US leadership + the BRICS initiatives + massive Trump deficits guarantees the new Chinese century.
Trump has no faith in U.S. capitalism, which has outgrown and outinnovated all rivals for the last 50+ years. If Trump had faith in our system, he would know that our free market system will prevail against a central planning system like China’s over the long term. However, this takes time to play out, and Trump cannot play the long game because he must ensure that he receives credit for his actions. He does not think like any other modern U.S. President, who understood that they were stewards of the Office of the President. In contrast, Trump sees the Presidency as conveying absolute ownership and control of the levers of government. What Trump has done with his reckless use of tariffs as tools of extortion is to shatter the understanding that the United States will not use its post-WWII leverage against our allies and friendly trading partners. With this trust shattered, there is no longer any reason for these previously pro-U.S. trading partners to choose U.S. trade over trade with China. China might steal intellectual property and sell goods at a loss, which would be damaging, but now that they cannot trust the U.S. to bargain based on a win-win proposition, dealing with China can be justified.
Trust once lost is very difficult to regain.
Yes I think the Supreme Court will rule against Trump. I think he will find another law, technicality, etc. to impose the tarrifs. If the Supreme Court rules against the Tarrifs then 100% of the Tarrif rebates should be paid directly to the citizens as we’re the ones who paid them.
Good point about the rebate checks. Maybe this is a sign that Trump / Bessent expect to lose. And according to Bessent, there are other Acts that they can use to continue tariffs. If this is the case, then they made a conscious decision to go down a path that they knew was legally dubious, possibly just to push SCOTUS into a ruling.
I made the same point so I agree.
He knew it was dubious and Biden knew full well student debt cancellation was dubious.
Trump will now have the SC to blame, and he will.
“paid directly to the citizens” Never going to happen.
And people think Bitcoin is the scam.
“Could the President impose a 50-percent tariff on gas-powered cars and auto parts to deal with the unusual and extraordinary threat from abroad of climate change?”
This the crux of the problem. If Trump can impose tariffs on Brazil because the current government is being mean to the last president then what’s to stop the next democrat president to impose tariffs on all nations not implementing DEI, Woke, LGBTsoup policies? What about mandating EV cars, wind turbines, solar panels all over the planet or tariffs for you?
I don’t think this problem stops with tariffs, all the “war powers” need to be reigned back in, it is outrageous Trump is murdering fishermen in South America because he thinks they are drug dealers.
We’re reaching all new levels of insanity here and the only way out is with a good exit strategy. Got one?
Trump is issuing unlawful orders to the Navy. Naval officers are carrying out those orders in violation of the UCMJ and should be indicted (actually Article 32ed if I remember correctly). What is also probably true is the non-commissioned officers and other enlisted are also in jeopardy as they are also required to disobey unlawful orders. This is one of the basic precepts of the “Chain of Command” in the US Military.
0
Damn, where’s my coveted “Mishelin”?
Has the award committee gone AWOL?
It’s right here Mish! Sorry for the delay but I do travel the internets to find only the best content and award only the worthy.
You are awarded a 3-star Mishelin award for this post for excellent insights, massive triggerings and in depth analysis.
I’d give it 5 Mishelin stars if I were on the committee.
But alas, I’m just a farmer. 😉
3 star is the max for high quality restaurants and blog posts. 5 stars is for movies and hotels.
I seldom discuss movies or hotels.
I demand a reversal of Mishelin rating awards.
I think you misunderstood. Michelin’s highest rank is 3 stars for restaurants.
https://guide.michelin.com/us/en/article/features/what-is-a-michelin-star
One MICHELIN Star recognizes restaurants that use top-quality ingredients and prepare dishes with distinct flavors to a consistently high standard.
We award Two MICHELIN Stars to restaurants where the team’s personalities and talents shine through in expertly crafted dishes, with food that is both refined and inspired.
Three MICHELIN Stars represent our highest honor. Again, we award Stars to restaurants, not chefs, but Three-Star establishments tend to have chefs at the peak of their profession, where the cooking elevates the craft to an art form, with some dishes destined to become classics.
The movie & hotel industry have their own rating systems that go up to five stars.
I probably missed something. If the tariffs are illegal and need to be repaid. Would that repayment go to businesses who passed the cost to the consumer.
Someones argument seems to be the cost of repayment is the reason not to call them illegal.
Legal speak causes my head to spin.
The plaintiffs blew this one in answers to Barrett. And they should have been better prepared for the question. CATO does not seem to think this is a big deal.
If a refund is messy, it’s because Trump purposely made it messy.
I may do a post on this. But yes, messiness is no excuse to let Trump have his way.
SCOTUS could restrict Trump’s ability to impose tariffs – and even strike down most of the one he’s imposed – without requiring that the revenue be paid back. That’s water over the dam. Roberts is especially afraid of doing difficult things.
“Roberts is especially afraid of doing difficult things.”
Then he should be booted off the SCOTUS. The highest court should be all about difficult things. If he wants an easy life, he should just become a retiree.
There is no way to refund the money to the proper parties. The record tracking isn’t there, so there is no mechanism. How many businesses have clsed due to the tariffs? How do you pay them?
Hahahaha! I f you believe that, you are a dumb f*ck.
U.S. Customs and Border Protection (CBP) maintains detailed records of tariff payments, which are essential for any potential refund claims.
Here’s how it works:
🧾 How Tariff Payments Are Recorded
• Customs Entry Summaries (Form 7501): Every import shipment is documented with a Customs Entry Summary, which includes:• Product classification codes
• Country of origin
• Duty and tariff rates applied
• Total duties paid
• These records are stored electronically through CBP’s Automated Commercial Environment (ACE) system, which tracks all import transactions.
🔁 Refund Mechanisms
• Administrative Protest Process: If a business believes a tariff was wrongly applied, it can file a protest under 19 U.S.C. §1514. This must be done within 180 days of liquidation.
• Post-Import Refunds: Under 19 U.S.C. §1520(d), importers can request refunds for duties paid in error or under certain trade agreements. These are processed through CBP’s Reconciliation Program, which allows for post-summary adjustments and corrections.
• Legal Challenges: If tariffs are later ruled unlawful (as in recent Supreme Court cases involving Trump-era duties), only businesses directly involved in the litigation may automatically receive refunds. Others must file separate claims using CBP’s procedures.
🧩 Is It a “Mess”?
• Some officials have called the refund process complex, especially for large-scale reversals. However, importers argue that the documentation is clear and refunds are feasible, thanks to the detailed customs paperwork.
There are a lot of shipping aggregators out there that take a bunch of orders that fill partial containers. Those aggregators (effectively) charge the tariff to their customers, and then the aggregators pay the tariff fees on their containers. If those aggregators get refunds, I assure you they are not going to track down all the partial order customers, some whose businesses have closed, to make sure they get their portion of the rebates. Use your brain. This is a problem being widely discussed as a problem in lots of news stories, so I’m not sure why you are blaming me for things that other people, more knoledgeable on this issue than either of us, have been saying openly in the news.
Regardless of the reasons, inside the questions I see the Justices asking is their subsequent focus on the capricious nature of Trump’s approach to these tariffs and their addressing an emergency–as they point out he threatened to aim one at Canada for an advert or towards Brazil for how they treated a former President. They don’t live in a vacuum. Even if there were a case for Trump, his own adolescent approach, whether real or simply vocalized at 2am, really skewers a reasoned, emergency-driven grant of tariff authority.
I think the odds he can win after reading this well-presented researched blog post is closer to 0 than it is to even 9 percent, forgetting the math-based logic of non-independence. I just don’t see how it isn’t higher than 6-3.
Now, about those refunds….I read there were financial players buying up the expected tariff refunds from players who’d rather have half of their tariff money back than risk getting none back depending upon the outcome. What a insane world we live in.
Like you, I read more into this decision than a win lose for Trump. If Trump wins this, I see it as another chip at the solid rock foundation of our country we call the constitution. A Trump win means the distortion of the original intent of the powers granted the 3 branches of government with a tilt toward executive power. It is a slippery slope to not follow the constitution literally as it was intended at the time it was written.
The sc will kick the can down, tell Trump what to do. That’s not a loss. They don’t want to divide the country. Chief justice Roberts owes Trump one. He had better be careful.
Not at all. In poker there are often hourly bonuses paid for “high hands” that is the highest hand dealt in that time period. So high hands when dealt can be beat.The odds of the hand “holding up” vary with the hand value and the time left in the period. Often high hand holders will sell their hand for less than the amount of the bonus for early reward. Not insane in the poker world, just fun.
Wow! Great research and presentation.
I have seen first hand what the tariffs have done to both farmers and small manufacturers that produce parts from aluminum. Devastating In one word.
The aluminum parts manufacturer has moved most of his manufacturing to a newly acquired facility in Canada. Fortunately the workers selling their homes have found a solid real estate market to sell into. Only four of ten homes are left to sell and two others have contracts. It is a big deal for those families that have chosen to follow their high paying and skilled jobs.
A friend is buying the former manufacturing plant.
I am continuing the process of negotiating on farmland that is headed into foreclosure or distress sale because of Trump’s tariffs. The farmland is owned by die-hard Trump supporters that continue to fail to understand how devastating his policies have been to farmers. No way do I discuss the politics as I negotiate, I’m a bit of a loudmouth here, but a quiet guy at coffee.
The giant corporate farms have the financial strength to withstand this years losses, but the little guys producing corn or soy with 40-180 acres? They are in serious trouble from my vantage point. Healthcare, taxes and insurance costs on top of huge increases for seed, fertilizer, equipment or leases are all nails in the coffin. Death by a thousand cuts.
Regardless of what this case decision is, the damage has been done and our family farms have taken another blow that will end some small percentage of multi generational farms.
Oddly the farm owners TWS is alive and well. I will employ as many as are qualified and motivated to learn alternative methods of land management and growing far higher margin crops more efficiently.
Farming is business after all… Like everything else: He who has access to capital first has the advantage.
Your friend is short sighted. He will lose the biggest aviation boom in history for two puny Canadian companies. Farmers biggest cost is equipment repairs. Trump cuts healthcare and the out whack Obamacare. Trump gave them bonuses. In China, Iran the ME, Argentina, Ukraine and in Europe farmers are struggling. Farmers are old. They are looking for exit strategy. Zoomers and boomers are not interested in farming. It’s too hard, too demanding, unpredictable and not very profitable. Too much debt. Farmers like what Trump promised and doing. They like his straight talk. He talks like a farmer, not like politicians. Trump likes god, family and country. And that’s what farmers like. Farmers are not infected by viruses or syndromes.
I have no crystal ball, and neither does Polymarket. However, Polymarket reflects the informed opinions of those willing to put money behind their opinions. My informed opinion is that this case SHOULD be a 9-0 decision against the President, but that is unlikely due to the deferential views of Alito and Thomas, and as Mish points out, their potential ability to sway Kavanaugh.
It seems ludicrous to me that we are even debating which way this should go. Tariffs are a tax. The tariff tax is not a tax on the importers; it is a tax on the importers’ customers, American companies and consumers. Tariffs are neither a regulatory tool nor a foreign policy tool; they are either a tax policy or a temporary response to a specific, declared abuse of trade laws and treaties. Trump’s tariff grab is neither. Trump has twisted his emergency declaration power to assume unilateral and unlimited power to impose tariffs to gain maximum “negotiating” leverage over any country or individual foreign leader he decides to take on.
Donald Trump has consistently operated in this manner. He cannot sit down and negotiate a win/win with another party. He must create/manufacture leverage in any way possible to ensure that the result is a win-lose in his favor. Some people will applaud him for this and be impressed by his no-holds-barred approach. However, in America, we are a Constitutional Republic that only truly works as designed if we have rules, laws, processes, all underpinned by what our founders and 200+ years of precedent defined as our view of universal principles.
Donald Trump has zero respect for any of the aforementioned norms and principles because these are the very things that he views as the “deep state” that has no purpose but to stand in his way of doing whatever he deems necessary.
He can’t negotiate because anyone that spends 5 minutes with him knows he’s a mendacious clown that doesn’t understand what’s being negotiated, and won’t keep his side of the deal.
All he has are police and manufactured crises.
i’m guessing you don’t get invited to many parties.
Depends on the drug of choice. You’re following me around like a little puppy dog for your hits, you little outrage junkie you! We are partying down!
The fisa court/ Jack Smith/ Willie & Hillary/ chief justice Roberts…
what stood out for me: JUSTICE GORSUCH: Yeah. So Congress, as a practical matter, can’t get this power back once it’s handed it over to the President. It’s a one-way ratchet toward the gradual but continual accretion of power in the executive branch and away from the people’s elected representatives.
Mish Interjection: Gorsuch is very concerned, and rightfully so, of Congress giving away its Constitutional authority, even if that was the intent. In this case, Congress did not have intent.
Thats the crux of the matter to me
THANK YOU MISH!
Yes, this struck me as well. I believe an Austrian paperhanger managed such a fiat victory in Germany through abrogation of legislative responsibility in 1933.
The common thread is the micro penis. Makes them insanely insecure.
your posts make me believe increasingly that we do, in fact, have a mental health crises in america.
Indeed, the potential tariff of 50% on ICE vehicles was a strong “Political” tell.
MWS are impressed by the Pearson bs.
Gen Z rioted in Mexico against Sheinbaum, toppled Nepal gov and Marrocco. It might spread to Germany, France and the US.
This is why I keep coming to your blog Mish. You are willing to spend the time, sweat the details and give us outstanding analysis. Much appreciated!
Well said. And I agree with Mish. And I think Trump loses and should lose.
The real issue then moving forward is will Congress start doing its job?
They are all bought and sold so I’m not sure anyone of them, republican or democrat cares more about the American people more than they do whomever is financing them.
Like you, I’m not optimistic regarding the courts or our political system, such as it is.
I only pay attention in order to take advantage in any way I can.
If the Supreme court rules against Trump, that is a small victory for our country, but I don’t see it reversing the trend of politicizing the court in the long run.
A ruling against Trump will only embolden him to find other ways around the court.
A ruling in favor of Trump, will simply speed up the process of turning us into a banana republic.
Either way, I will continue to focus on how to improve my life, rather than dwelling on things I cannot change.
Small victory?
Yep. A small, but likely temporary victory for the rule of law, which keeps our country from sliding into a banana republic even faster.
Tariffs are absorbed by foreign exporters – benefitting from devalued currencies and subsidies – US importers and US consumers. Chief Justice Roberts: Obamacare and tariffs are taxes, and that’s a core power of congress. But they are also a foreign taxes, taxes imposed on foreigners. And foreign affairs is a core power of the executive branch. Justice Barret: payback is a mess. Odds: Tariffs 70% : 30% payback. Trump will get his tariffs this way or by other ways, so why bother. Tell him what to do. Get rid of him. Chuck’s shutdown #2 odds: Trump 70% : 30% boss of the bosses.
In no way are U.S.-imposed tariffs “foreign taxes imposed on foreigners.” The U.S. government or the President has no legal means or mechanism to impose taxes on any foreign entity or person. The U.S. government can tax U.S. entities and persons, as well as foreign entities or persons operating in the U.S. But import tariffs are not taxes on importers; they are taxes on imports, and those taxes are levied on the purchasers of those imports, not the importer itself. One could argue that they are trade barriers used to “regulate” imports, and that would be functionally true, but that does not get around the fact that they are taxes on U.S. entities and persons, thus if a President wants to use tariffs to create strategic trade barriers, he or she can makes such a policy, but the tariff mechanism related to that policy still needs Congressional approval as a tax. It would be entirely the prerogative of the Executive Branch if, for instance, it wanted to regulate or restrict the importation of a particular product, if it could show that it was too dangerous, or if the profits of the foreign entity manufacturing the product were directly or indirectly funding terrorism. However, as soon as tariffs are included, except in particular circumstances such as dumping or other specific unfair trade practices, tariffs require Congressional approval as a tax.
Roberts: Tariffs are penalties imposed on foreigners. Penalties are taxes. Tariffs imposed on foreigners is the core power of the executive branch. Congress isn’t transferring power to the president, a power which belongs to the executive branch, a power which congress doesn’t have. Penalizing people who refused to pay Obamacare are taxes, which are the core power of congress. Penalties on foreign co are taxes imposed by the executive branch.
You cannot be this dense? Please explain the mechanism of collecting tariffs from foreign companies. Please explain the legal authority under which the U.S. government can tax a foreign company for simply selling its “legal” goods to a domestic buyer? Let’s flip this on its head. I own a U.S. company that manufactures cell phone cases, and I received an order from a French retailer for 1,000 cases at $5 per case. I shipped the 1000 cases to France, and the French retailer received them. Let’s assume that France imposes a 10% tariff on such goods imported into the country from a foreign manufacturer. I accept payment from the French retailer at the contracted price of $5 per unit, totaling $5,000. The French retailer then pays $0.50 per unit in tariff/tax collected by the French government before that retailer can take delivery at the port of entry. Now the French retailer owns 1000 cell phone cases, and that retailer’s final cost comes to $5.50 per unit. France did not tax the American cell phone case manufacturer; France taxed the cell phone cases at the port of entry, and the French buyer of those cases paid that tax. France has no authority to tax an American company.
“You cannot be this dense?”
Oh yes he can.
The question ultimately resolves to who ACTUALLY pays the tax, since that represents the transfer of wealth.
In your example, what happens when the French importer tells you that other countries are reducing the price of their phone cases to $4.55. Any reduction in the $5 price by your competition takes away your sales. How long do they need to reduce their prices before you go out of business?
If the importer feels that he must reduce his price to attempt to level the playing field, that does not change the fact that a tariff is a domestic tax. Second- and third-degree market adjustments will be variable and uneven, depending on the product. One can make the argument that you are making, but that argument is theoretical at best and does nothing to change how tariffs work.
“ Tariffs imposed on foreigners is the core power of the executive branch. ”
almost as if article 1 section 8 doesn’t exist in your little shrek like fever swamp
“Tariffs are absorbed by foreign exporters”
You really are brainwashed stupid.
The pathway: China devalued the Yuan in tandem with subsidies to avoid unemployment. The Chinese gov, mfg, the wholesalers each absorbed a small portion of the cost. When the goods arrive the banks pays the custom agent: the cost of devalued goods, shipping, insurance plus 50% duty. The importers pick up the goods. Their customers [consumers, mfg, wholesalers] pay: cost of goods plus 10%/60%/300% markup. It cover: cost of goods at the custom agent, OH, interest, insurance… To reduce risk importers might sell 30%/50% of the new shipment for 5%/ 10% markup to cover cost. The rest will sold for higher prices. High turnover increase profit, reduces risk. Importers might “rent” goods for a limited time, during Xmas, before <ret for cr>. The banks finance the pathways.
There is nothing wrong with selling for a 4% markup: 10,000,000 x 0.04 = $400,000. The banks salivate. The custom agent is the kings.
Some part of the tax might well be absorbed by the foreign exporter, depending on its cost structure; with the gain in market share compensating in part, or whole.
Now, which country has the greatest opportunity to benefit by ‘eating’ the tax, overall?
he’s smart. he’s just a troll.
Not one dime in Scotty Basement’s treasury account where tariff revenue is deposited came from a foreign country.
I don’t think I understand the words “conservative” and “liberal” anymore. Someone tell me how giving the President this kind of power is conservative. I found the climate change argument especially convincing.
Note that was raised by Sotomayor and was probably for the benefit of her conservative colleagues to make it clear what siding with the administration means.
Perhaps Trump, Vought and Miller are gambling that they can pull some massive executive move of their own, that would preclude the lefties from ever pulling such a comparable counter-move. That would seem to be the general kind of chutzpah displayed with the election gerrymandering escalation (a state government action, but very coordinated with DC). They are raising the stakes daily, experimentally practicing, as Lenin would have it, probing with a bayonet. It all seems predicated on reaching some durable plateau of irreversibility. I know Vought has alluded to a thought process I would see as parallel to this, sorry, wish I had the quotes.
There are no liberals (implying valuing individual freedom and tolerance) anymore; they’ve morphed into authoritarian leftists. And 95% of Republicans aren’t conserving anything but the Uniparty ruling class. The words conservative/liberal now obscure communication and are as useless as “racist” and “antisemite.”
SCOTUS gets some sophisticated statistical treatment here! My less sophisticated view is that Trump’s case for imposing a huge tax burden on American consumers is by now so hopelessly confused that Trump himself must be rooting for SCOTUS to vote against the tariffs.
How long before he blames tariffs on antifa?
when tariffs become violent and throw fire at people and teslas.
Antifa loaned Chines banks billions of dollars so those banks could pay US customs agents to cover Walmart’s tariff bill so antifa is gonna get Trump’s big dividend, and how would that looky?
/
It will be Biden’s or Obama’s fault.
Thanks Mish, what a well crystalized review and analysis.
I listened to all of the testimony on 5 Nov. In the Q and A it was interesting how individual court members guided the testimony through their sharply directed and redirected questioning with Alito and Thomas asking questions that provided end-run possible solutions for the administration should the SC (? next June) find the tariffs unconstitutional in the context of the original intent of IEEPA and the balance of power described in the broader constitution.
My gut with Kavanaugh’s more neutral questioning was a final 7 to 2 vote.
Maybe in the last 9-10 months of bizarre anti-institutionalism anti-ally policies and in-your-face outright corruption, the ‘moderate’ court members now realize they have deconstructed to too-great-an-extent executive guardrails and provided the executive with too much immunity protection in their previous rulings. After all, they don’t have to be worried about being elected every 2-6 years.
What will the economy look like in June 2026? By that time even Alito and Thomas may have to question their judgements a little.
The Grifter in Cheif will lose, as he always does when he can’t cheat or lie. The ramifications of this humiliating loss will be more chaos, explosion of debt issuance & exploding yields.
Most of the ‘debt issuance’ derives from a Congress that can’t control its spending.
The President presents the initial budget to Congress. Usually Congress calls it dead on arrival. This year, the President presented the One Big Beautiful Bill and it was passed with near unanimous Republican approval.
A Democrat President could impose a 50 percent tariff on any country that does not ratify and follow the Paris Agreement, an international climate change accord, if the SC approves this mess.
A Democrat President could impose a further 25 percent tariff on any country that does not allow trans-national unions to operate within their country unimpeded.
These Republican appointed SC members would have to be out of their collective minds to agree with Trump’s tariffs.
A republican president just now raised tariffs against Brazil because he did not like a judicial ruling there. Even if you buy the reciprocal tariffs nonsense, you don’t need to look beyond this administration to see how that power will be abused.
The plan is to rig election so that they’re never is another democrat president to worry about
your political insight is absolute stunning. maybe the best ever. tell me, at what prestigious junior college did you get your associates degree in women’s studies?
The supreme court needs to rule based on how the law is written. Isn’t this what they are supposed to do and not interject political bias into their decisions? It would seem based on that Trump should lose 9-0. If people can’t trust even the supreme court to be unbiased in their decision making it will contribute to the unraveling of our system. It is already to the point few trust the govt and legal system in general. All part of the fourth turning.
Some ideological bias is likely impossible to avoid, which is why there are nine judges to hopefully avoid the worst instances of that. But Judge Thomas appears to be a clear cut case of ‘bought and sold’. That leaves 8.
Thomas and Alito are both Christian Nationalists who see Trump as a mechanism for the eventual overthrow of the Republic and installation of a Christian Nationalists government.
That ship sailed during the FDR era. We have been contorting the constitution to enhance federal power for the last 100 or so years.
What strange bedfellows for big bump-ups of executive power: Lincoln, FDR, Trump.
“When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it.”
~Frederic Bastiat
Correct. The courts have helped keep our country from becoming a banana republic for a long time. Their increasing politicization means we are sliding down that slippery banana peel slope. With little hope of recovery.
Which is why my message remains the same. Focus your time and attention on what you CAN control in your life. Health, wealth, relationships.
Instead, many here want to waste their time debating which political party is “winning”. What a sad and depressing way to live your life.
Good point. My faith, if any, in our society not falling apart, goes to the regular people decently providing value to each other in everyday relations and operations of life. As for this bizarre Squid Games of politics, it is getting weirder by the minute.
Most people have no inner life… politics is the preferred substitute.
again, wildly stunning insight here. carl jung is rolling over in his grave at your intellect.
#mostironicpostever
Fantastic analysis, thanks! I was very pleased to see the justices really seriously digging into the merits and the implications here, versus the recent shadow docket decisions where they (a majority anyway) deferred to Trump’s vigorous executive moves fast-forward and without comment. Finally this level of seriousness has come due. But those shadow cases still concern me, casting a shadow, if you will, on the prospects here, alongside other recent wholesale deference to presidential prerogatives and immunities. For a court supposedly so conscious of originalism, that level of deference does not seem (to me) a good fit for the original constitutional setup, which had a lot more Congress in it. To execute means to take action, yes, but also to carry out laws, much much less to write them (legislate). Sadly, the decayed state of Congress, its inability (or unwillingness) to do its job, is unhelpful, in this historic moment. The electorate is too selfish to insist on a Congress that can get things done collectively. This opens a path and a set of excuses for executive overreach. The executive is too narrow and personalized to cover all that.
TACO^21 salivate.
“Sadly, the decayed state of Congress, its inability to do its job, is unhelpful, in this historic moment.”
IMHO, that decayed state is a direct result of our electoral system where almost all members of Congress and the Senate get reelected. Taking action implies unwarranted risk while doing nothing guarantees reelection. Unfortunately, every solution requires a constitutional amendment which would never pass because it would have to be voted on by the very people it seeks to rein in.
Congress was specifically designed to function differently than a parliament. It can only work when legislators represent a district and not a party.
Now, since it is virtually impossible for a member to lose their seat unless they lose a primary, they have become obedient to their faction – or party – and not voters. Congress is now a parliament and the majority party has complete control.
Individual members have little function. They are all basically back benches and have no responsibility to voters. This has led to the corruption and ineffectiveness we now see and is why the imperial presidency exists
It does not matter what the Supreme Court decides.
President Trump can ignore the Supreme Court and continue on with the tariffs. We have a system of checks and balances. However, Congress is not going to do anything about it. President Trump is extremely popular and powerful within the Republican Party. No Republican member of Congress will dare disagree with him let alone impeach him.
Nimesh: “It does not matter what the Supreme Court decides.President Trump can ignore the Supreme Court and continue on with the tariffs. ”
Mish: Actually it does. And I laid out that case in a long footnote.
While it’s true that Trump could try to ignore the Court, the bigger the margin, the less likely that would be.
He could easily get impeached and probably would.
In a 7-2 margin would Trump even try?
Besides, Trump would likely be grateful to have something to moan about. Think about that.
“THE ECONOMY WOULD BE GREAT WERE IT NOT FOR THE STUPID SUPREME COURT!!!!!! WE WERE WINNING BIG!! THANK YOU FOR YOUR ATTENTION”
Trump will be happy to have someone to blame. And he has other means of stupid tariffs to fall back on.
For every law and court order Trump ignores, it will be extra ammunition for a democratic controlled congress to impeach Trump. I don’t think it will matter though, at the rate of Trump’s health deterioration, I don’t think he’ll make it to the end of his term.
But if he does survive, the economy will be so screwed up, everyone will be up in arms.