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President Trump’s Tariffs and the Separation of Powers at the Supreme Court
In this episode of Stanford Legal, hosts Pam Carlin and Diego Zambrano discuss President Trump's tariffs and the constitutional implications surrounding them. They are joined by legal expert Mich...
President Trump’s Tariffs and the Separation of Powers at the Supreme Court
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Hello, hello Malcolm Gladwell here on this season of Revisionist History.
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We're going where no podcast has ever gone before.
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In combination with my three-year-old, we defend the show that everyone else hates.
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I'm talking of course about Paw Patrol.
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There's some things that really hiss me off when it comes to Paw Patrol.
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It's pretty simple.
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It sucks.
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By sun watches Paw Patrol, I hate it.
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Everyone hates it, except for me.
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Plus, we investigate everything from why American sirens are so invariably loud.
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To the impact of face blindness on social connection.
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To the secret behind Thomas's English muffins, perfect nooks and crannies.
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And also, we go after Joe Rogan.
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Are you ready Joe?
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I'm coming for you.
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You won't want to miss it.
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Listen to Revisionist History on the I Heart Radio App, Apple Podcast, or wherever you
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get your podcasts.
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Tariffs are taxes on Americans.
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The tax bill goes to my clients.
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My clients pay the bill.
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Tariffs are not paid by foreign governments as President Trump sometimes says.
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Taxes on American citizens is something that is closely guarded by Congress.
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We actually fought the American Revolution largely on the slogan of no taxation without representation.
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That is to say that you shouldn't have to pay taxes unless you're represented in a represented
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and a legislative body that an axed on.
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This is Stanford Legal, where we look at the cases, questions, conflicts, and legal
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stories that affect us all every day.
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I'm Pam Carlin, along with Diego's Imbrano.
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Please subscribe or follow this feed on your favorite podcast app.
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That way you'll have access to all our new episodes as soon as they're available.
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Today we're going to be talking with our colleague Michael McConnell about something that
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does affect us all every day.
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If you buy any products other than things at the local farmers market and maybe even there,
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which is the tariffs that President Trump has imposed on a huge number of nations and
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a huge number of goods and the challenge that's been brought to those tariffs.
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It's great to have Michael back on the show.
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Michael is the Mallory Professor of Law here at the Law School.
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He's visiting at NYU for the fall and he is serving as one of the lawyers in a challenge to the
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tariffs case.
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Michael is also, I should say, somebody that William Brennan, who was justice on this
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room court once said was one of his two smartest clerks.
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And so having Michael here to talk with us about the tariffs case is especially good because
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this is actually a really hard and complicated issue.
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So thanks so much for coming back to the show, Michael.
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Thanks, Pamry.
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You sure he didn't say I was one of those smart allocate clerks?
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No, he actually said, and this is actually such a tribute to you and away, Michael.
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He said, you know, my two smartest clerks were Michael McConnell and Richard Posner.
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And I don't agree with them about anything.
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Now this was, of course, after a couple of martinis in Miami after he'd retired.
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But I really do think that you bring so many different skills to being a law professor,
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both having been a former federal judge and being an active litigator in addition to
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being a scholar of presidential power, stretching back to the founding.
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So it's just delightful to have you here.
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My, I don't know what to say.
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That's the most flattering introduction I've ever gotten.
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Oh, well, usually you have to be dead before people say such nice things about you,
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but I figured worth saying now being it and why you was kind of like being in a Tom Sawyer.
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It is funeral. Oh, I thought are you asking people to paint fences?
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Actually, I do. Yes.
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I got people to give me free help on tariffs because I've had to do a whole
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education in American trade policy.
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Yes. So maybe we should start with what actually the president did.
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So on April 2nd, he issued an executive order, which declared an emergency under the National
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Emergencies Act, an emergency with respect to what he called large and persistent trade deficits.
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And in the at the same time also said that they presented an unusual and extraordinary threat
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to various American interests.
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Those are all buzzwords in a statute called the International Economic Emergency Powers Act,
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which everybody calls Aiepa.
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I love that name Aiepa.
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And what Aiepa does is it gives the executive a number of authorities having to do
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with world economic matters that are triggered only on upon a declaration of emergency,
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but also can only be exercised in the case of a quote, unusual and extraordinary threat
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to American interests.
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Aiepa is a successor statute to something that was called the Trading with the Enemy Act.
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And the Trading with the Enemy Act was essentially a codification and extension of old common law
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principles about it rising out of the law of war.
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So when a country declares war, it becomes illegal for their own citizens to engage in trade
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with the enemy country.
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It also authorizes the belligerent nation to seize property and do a number of other things.
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Aiepa carries over a number of these authorities.
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None of them historically had anything to do with tariffs.
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They all had to do with things like embargoes, blockades, asset freezes, that sort of thing.
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So like no Cuban cigars.
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No, no Cuban cigars.
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Exactly.
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They're the most famous use of Aiepa was in the Iranian hostage crisis.
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When Jimmy Carter and then joined by Ronald Reagan, negotiated a settlement under which the
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hostage, the American hostages were returned to the United States and exchanged for setting up a
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process for getting you getting Iranian assets back into Iranian hands.
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And this involved free, this involved suspending certain claims that were pending in U.S. courts
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against Iranian companies.
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And so that essentially releasing a whole bunch of billions of dollars was involved.
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And the Aiepa was used to that.
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So this has to do with asset freezes.
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Again, never tax that.
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The taxing power is vested in Congress.
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And there's no doubt that that is taxing that imports as well as anything else.
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This is Article 1, Section 8, clause 1.
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The very first clause giving the powers of Congress.
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And it gives Congress the power to impose taxes, imports, imposts and duties.
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Well, imposts and duties are those are just synonyms for tariffs.
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And in the early years of the Republic, tariffs amounted to the vast majority of federal
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revenues, often more than 90% of federal revenues.
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They were the leading tax.
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And so when people speak of the Congress having the power to tax and power the purse and
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the early years of the Republic, that really meant control over tariffs.
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And it has only been recently that presidents have had any authority at all.
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And we say that the president has to stick with the specific statutes to talk about tariffs,
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to give him authority with respect to tariffs.
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And he can't reach out to IEPA, which doesn't even mention tariffs.
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And by the way, no president has ever used it with tariffs in the past.
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Before we get into the weeds of the tariff arguments in the case that you're
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mitigating, I want to again ask the broader question of emergency powers in general.
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So you've mentioned just the history and the framers.
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And it seems like there's this enormous web of emergency powers in general.
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Do you see those as a monstrous deviation of the original design of the Constitution?
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Or are our emergency powers appropriating?
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You happen to disagree with the one here.
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So the president has no emergency powers vested by the Constitution.
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But if Congress chooses to give him defined emergency powers,
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I don't think there's anything wrong with that.
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And indeed, I think there are circumstances in which somebody has to be able to move quite
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quickly in the event of an emergency.
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You can't always bring Congress together and get something passed.
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I do think that there is a problem with the National Emergencies Act in that it is
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extremely broad and it unlocks powers under I think it's 180 different statutes.
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And when the Emergency Act was originally passed,
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it, Congress had a one house with veto or I may have been a two house veto,
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but it had a legislative veto.
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So that if the president declared an emergency and Congress didn't agree,
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they could immediately shut it down about 10 years later, the Supreme Court held that legislative
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vetoes in general, not specifically about the Emergency Act, but legislative vetoes in general
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or unconstitutional.
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And yet the Emergency Act is still out there.
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Congress felt free to write a very broad statute because it would hold the reins.
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And now we're stuck with an unusually broad statute without the check that Congress originally.
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If I can follow up on what Diego was saying, Diego, I'd look for your reaction to this as well.
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There are two different issues here and away.
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One is, can Congress give these emergency powers to the president and did it?
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And the second is, what counts as an emergency, which also there's not a kind of really great definition of is there?
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Well, there's no definition at all in the Emergency Act.
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And we've got a president who seems to think everything is a five alarm fire.
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Yeah, I mean, this is true.
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Although, you know, we have to acknowledge that previous presidents were pretty free to declare emergency as well.
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Are there quite a few emergencies on the books with about, you know, any number of things?
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Very rarely do they pertain to a massive domestic policy like attacks?
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I mean, this is, I think, the most far-reaching
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presidential act justified on an emergency basis.
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I mean, maybe a related question before we get into the weeks of the case and I do want to do the
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the question of congressional inaction.
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You mentioned the, this system might make sense where Congress can't act and therefore it delegates to the president,
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emergency powers to act as quickly as the president can.
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But now you have a situation where Congress could act is just paralyzed by for different reasons.
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It seems again, this is kind of a corruption of the, of the way the system is supposed to work.
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This is a broader problem than just the emergencies.
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Recent years,
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presidents have tended sometimes to take the view that, well, if Congress won't do it, they want,
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then Congress isn't doing their job and we'll just do it ourselves.
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You know, President Obama was famous for saying something like, I have a phone and a pen.
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So he's just going to do it.
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As you say, this really is a departure because if, if there's a power that is vested in Congress and Congress does not act with that power,
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it means that there is no authority on the executive to execute.
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Yeah. Do you want to turn it?
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Do you want to turn now, I think maybe to the, the tariffs case itself and a little bit about how this,
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how this case came about and what the claim, what the claim you're making is?
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So there are actually three cases that are consolidated.
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I am involved in one of them, which I think is the most important, maybe because I'm involved,
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but because it has real plaintiffs with real stakes in the action, there's no question of
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standing that it's a direct, our clients are five small businesses that have paid tariffs and are
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suing for a week.
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They're also affected by the tariffs and other ways in that their input costs have gone up in many cases.
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That's enough to drive them out of business.
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Fortunately, they haven't gone out of business yet.
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The other two cases, one was brought by 12 states, all of them with democratic attorneys general,
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and then there's a third case, which was also brought by individual businesses,
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but not, not brought in, this is really getting into the weeds,
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but our cases was brought in the Court of International Trade.
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There is a statute that provides that any litigation about the enforcement of tariff laws must be brought in the
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Court of International Trade and nowhere else.
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And the, this other group, the, the leading plaintiff is called learning resources,
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brought suit in an ordinary federal district court.
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And so the, so there's a traditional question as to where the case should have been brought,
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or the Supreme Court allowed learning resources to intervene in this,
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or to be consolidated and to be part of the same action, so that no matter where jurisdiction is,
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the Supreme Court's going to be able to decide this case.
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And they put it on a super fast track for them, which is they set it for the November,
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November sitting the first week of the November sitting.
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That's right.
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They could hardly have acted any quicker, but note that this is not one of those emergency,
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so-called shadow docket cases where they decide important questions, or provisionally,
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without there having been a full decision.
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There's an actual decision by the Court of International Trade on the merits, full opinion.
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There was a full consideration by the, the appellate court with the decision on the merits.
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There will, there's full briefing, there will be argument.
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This is a normal case.
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It's just that they're doing it quickly.
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Yeah, which I think, which I think is so much better than what they've been doing with the shadow docket,
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because the parties do have a full opportunity to present their arguments both in writing and orally.
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Yes, I don't think it's the Supreme Court's fault, but these cases where they have to grapple with,
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you know, difficult issues often, you know, for the first time,
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where there hasn't even been a decision below is, it is a, it is a problem.
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But that our case is not like that.
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So let's talk about the reasoning of this decision in the federal circuit.
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In broad terms, according to how that regulate importation doesn't authorize these tariffs that the president issued.
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And there are a bunch of tariffs, and it actually is important to entangle which tariffs we're talking about,
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because they, they may be authorized by different statutes.
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But the main one here, AEPA doesn't authorize this.
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Now, this was a seven four majority decision, and there were four dissenters who wrote a compelling dissent
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on why they think that AEPA does authorize these tariffs.
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So what do you think is the biggest disagreement there?
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Maybe start discussing the statutory texts?
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Yes. So the big disagreement is over the meaning of this phrase,
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an AEPA, namely the president, that in the event of the unusual and extraordinary circumstances and an emergency in that event,
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the president has the authority to engage to certain things.
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And one of them is to quote, regulate importation or exportation.
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And it was the opinion of the majority that that does not include taxation.
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The regulation is a separate kind of power than the power to tax.
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But even if it did that AEPA, if there's any taxing power at all,
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that AEPA has to be limited in some way,
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that it can't just be an unbounded power for the president to be able to do whatever he wants.
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A great deal of this has to do with the history of how AEPA came about in the 1970s.
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And that's really where the, you know, and may get into the weeds,
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but I think that's where the real meat of the legal argument in the case is.
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Absolutely. And I just think we should just say briefly that the tax,
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regulate importation doesn't include the word tariff or customs.
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It doesn't do the or tax duty tax, et cetera.
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And so you could argue just on a textual basis that this isn't covered.
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This is the president doesn't have this power.
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You could and we do the government argues, you know, quite strenuously that the term regulate might sometimes.
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It doesn't preclude taxation and sometimes it includes a taxation.
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You could imagine, for example, a statute that says something like the FDA may regulate cigarettes by imposing taxes.
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That is not an incoherent idea, but our position is without some sort of special
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context or words of that sort.
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Sort you don't just read into the word the bear word regulate this very different power of taxation.
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Well, and especially when you do have other statues that more explicitly say things like taxes, et cetera.
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However, Michael, I do.
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And also, that's a very important point, Diego, because Congress has passed a series of statutes giving the president explicit powers to impose
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tariffs under specific circumstances.
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So for example, where type of import in dangerous national security import or exports.
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So for example, this might involve the export of militarily significant technology.
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The president is able to block that under that statute.
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Another statute provides it won another country trading partner is engaged in dumping or other unfair trade practices
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so that the president can respond with the tariff, but through a rather elaborate process.
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It has to be.
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And those statutes have both a lot of process.
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And then they also have a lot of substantive restrictions on how much the tariff can be in some cases or for how long it's imposed or like.
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And if the president can proceed under IEPA, presumably his claim is, yes, unlimited authority decide how big the tariff is and for how long.
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Yes.
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And the most pertinent such statute was just passed, you know, the Congress before IEPA.
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And this is section 122 of the trade act of 1974.
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And it is in the case of large of large and serious trade deficits that the president can act, but he can he can't increase tariffs by more than 15%.
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And he and it only lasts for 150 days.
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So most of president Trump's tariffs are at least a great many of them depending on whether you know he keep they keep changing almost every day on and on on again off again.
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But many of his tariffs are in excess of 15% 57% on Brazil.
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For example, 30% on India.
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China seems to change every day.
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The so they're in excess of that limit and also their perpetual they're not they're not limited to 150 days.
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Our position is when Congress enacts a specific statute allowing a certain power that limited in a particular way, it makes no sense to say that another statute that doesn't even mention tariffs just allows the president to do whatever he wants.
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Yeah, and I do want to talk about the history, but I will say the government has to start giving that the statute does say the president can prohibit the importation and it would be maybe nonsensical to say that you can prohibit the importation, but you cannot tax it.
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Right, that the greater power to prohibit includes the lesser power of taxing now maybe just briefly address that, but then I want to talk about the Nixon precedent because I think a lot of the case hinges on that.
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So I'd be happy to let me the greater includes the lesser argument.
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There's both a historical and a logical problem with that argument.
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The historical argument is that IEPA comes from the Trading with the Enemy Act and the Trading with the Enemy Act was essentially a codification of the old law of war, which prohibited imports and exports when you're at war with another country.
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It didn't allow taxation and it was never used for taxation.
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So the prohibition taxation line is embedded in the very history of these powers logically speaking, though there's some reasons why their taxing powers really not a lesser power for one thing taxation yields revenue.
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And you know, president Trump is proud of saying how many hundreds of billions of dollars his tariffs are going to bring in.
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Well, that's a real temptation embargoes, you know, prohibitions don't bring in any money and bringing in money is always a very tempting thing.
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And so, you know, it makes sense to treat these two things as quite different because the politics of them, you know, the practical consequences are so different.
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The second thing is that these prohibitions are prohibitions on foreigners importing into the United States tariffs are taxes taxes on Americans.
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The tax bill goes to my clients, my clients pay the bill tariffs are not paid by foreign governments as president Trump sometimes says taxes on American citizens is something that is closely guarded by Congress.
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Of course, we actually thought the American revolution largely on the slogan of no taxation without representation.
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That is to say that you don't you shouldn't have to pay taxes unless you're represented and represented in a legislative body that an ax them.
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So the idea that the regulation is greater and it includes the lesser just seems like a category error.
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Yeah, I mean, I've always thought the two are kind of orthogonal to each other that that, you know, they're not they're not one is not smaller than the other in the way that, you know, assault is less than assault with a deadly weapon.
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It's not it's not like that.
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And you raise one point that I just want to say one thing about and then turn back over to Diego, which is the president keeps saying as he's noted that foreign governments are paying these tariffs.
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And that's just at the end of the day, not true.
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I mean, at some point the cost of those tariffs gets passed on not just to your clients who are American businesses, but to the customers of those businesses who are going to have to have to pay this stuff.
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And one of the things that's so extraordinary to me about the government's arguments is not just the quality of some of them, but also.
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I mean, you were an assistant in the Solister General's office for many years before you became a professor and then a judge and then a professor and and like and some of the statements the Solister General has made in his filings with both the federal circuit and the Supreme Court are just unlike anything I've ever seen from the government before.
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I mean, there was a letter saying without the tariffs America was a dead nation and and like and I just think it's worth sort of noting how unusual that all is.
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Well, Pam, you're a professor of law and you can point things out like that as one of the lawyers in the case.
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I think I'm going to pass on commenting on the other sides of briefs.
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Yeah. Yeah.
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That's why I thought I'd say a little bit about it, but back to you, back to you Diego.
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Well, there's this question that we've been now mentioning several times on the history of how the statue was enacted and there's this argument that under the previous statue before I eat by the trading with the enemies act.
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President Nixon, Nixon actually imposed a 10% global duty and the argument is twofold.
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One that Nixon used the same exact language in that previous statute regulate importation to do that.
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Number one, and that that same language was preserved in AIPA.
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Michael, you can tell us about that major decision on the previous language, but two that there is precedent for a president doing this.
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And that affects a second question in the case, the major questions doctrine, the idea that we should read statutes such that the president or administrative agencies don't have the power to impose major on precedent and regulation that has an effect on the economy, etc.
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So we're going to get into that, but talk to us about the Nixon case and the meaning of it.
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Yes, this is really important to the legal detail of the case because of the government you you exactly summarize the government's argument, which is this language, regulating importation or exportation is the same as language in the trading with the enemy act.
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And it had been so trading with the enemy act was originally passed entering World War One.
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It was never used for tariffs until 1971 when for one time only a president did use it for tariffs.
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And this was Richard Nixon at a time, by the way, of an undoubted emergency.
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Basically what happened is that the old monetary system, the gold standard broke down and there was a very quickly there was a real problem.
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And President Nixon imposed a 10% surcharge note that that's respecting all of Congress's set rates, but just of changing, changing them by 10%.
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But and only and it was temporary it lasted actually less than five months.
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And how did Congress respond? Congress actually didn't disagree with the economics of what Nixon did.
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It was probably one of Nixon's smartest moves in a way, but they were very concerned about the assumption of power.
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And so there were hearings on the trading with the enemy act in which witness after witness came in and said this is just a dangerous power.
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It's been used too much. We need to cut back on it. Even the administration at the time testified that maybe this needs to be cut back.
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And so they did several things.
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The first thing that they did was that they passed a specific statute to give the president explicitly the power that Nixon had exercise.
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So they explicitly say in the case of of large and serious trade imbalances, the president can impose tariffs, but only within 10 with only 15% limitation and only for 150 days.
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So essentially what they did was they would not have passed that if they had actually if I eat a really meant of trading with the enemy act at the time really did provide this authority of Congress thought it did.
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There'd be no need for the statute. So what they did is they they after Nixon asked or acted.
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They they come in and they affect ratify his decision, but with a very narrow and specific statute.
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Secondly, they then repeal the trading with the enemy act except in the case of declared war.
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So that's now aside. And then third, they enact IEPA.
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And by this time, they now think that the tariff issue has already been dealt with.
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And so they don't even mention tariffs. There's nothing about tariffs and the legislative history. Nobody talks about tariffs.
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It just wasn't on their minds. And the reason for that is that they had already dealt with the tariff question in the trade act.
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But here's the second aspect of this that so Nixon does his tariffs is 10% surcharge.
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They are immediately challenged in court, customs court, which is the predecessor court to the court of international trade says.
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Nixon didn't have the power to do that. He can't do that. Trading with the enemy act doesn't mean that.
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Regulating and portation does not mean that. That's then that's when Congress and acts the section 122 of the trade act,
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giving the president this very limited authority.
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By this time, the tariffs are over. And so all that is at stake in the litigation is whether the people who had paid the
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tariffs are entitled to a refund. And the appellate court reverses the customs court. And they say,
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Tweetia is broad enough to encompass Nixon's tariffs. And the reason that that was okay is that Nixon's tariffs were so limited.
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They were temporary. And perhaps most importantly, the way that Nixon did them is that they were all under the
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Congressional Authorized rates. So Congress had authorized tariffs at a pretty high level. And then over the years,
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and given president's authority to negotiate with trading partners to bring them down.
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And so what Nixon did is he went up by 10%, but only
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only countermanding decreases that had been by presidential decision, not congressional decision.
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So he completely stayed within the legal structure of what Congress had previously an act.
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Although Michael, this doesn't at least
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But yes, but if the only reason one might think that is because a court
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said so, then you want to look at what the court actually said. And so what the court said is that
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it we're limited to this very, you know, we're approving very narrow, limited tariffs. And they go on to
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say, we are not, they're explicitly say that we're not interpreting this to give the president
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unbounded terror of authority. They say that would actually even be unconstitutional. It would be
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contrary to the whole history of trade regulation and so forth. And so I'm wondering how
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wants to say, well, that means unbounded authority. Yeah, a lot of this hinges and you've given us
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a lot of great detail on how we interpret that that original Nixon global duty of 10% the Yoshida
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case in between and then what Congress did in IEPA. And so there are lots of arguments about that
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and the dissent, at least by the government's arguments. And a lot of the Supreme Court case will
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revolve around that. I want to ask you a final question here on the major questions doctrine.
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And so as I mentioned a second ago over the last 10, 15, 20 years or so, the Supreme Court has
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increasingly used this doctrine to limit the power of agencies usually, but also the president
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to at least issue regulations that have vast economic and political significance.
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And the court has said we're not going to interpret a statute to confer that power
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unless Congress is very clear about that. And the argument here is that we should read the
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statute as not conferring this authority on the president because it would be vast
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of vast economic and political significance. And so talk about how you think that's going to go
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in front of the Supreme Court and then we'll end.
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Well some people, some observers have said that that's really going to be key to this because
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if you look at this history of the 1970s and the fact that Congress did continue to use language
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from the Trading with the Enemy Act, maybe that opens up a possibility, but it certainly isn't clear.
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Congress did not make itself clear when it did that. It didn't use any language that refers
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to tariffs. There's nothing in the legislative history that supports this so it is not clear.
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And so if something of this importance, and this is the biggest, this is probably the most major
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question of any major question the Supreme Court has decided it's hundreds of billions of dollars
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every year. If the Congress has to express itself clearly that then what President Trump did
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can't possibly be sustained. There's also I think a political dynamic here because this doctrine
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has become used very frequently in recent times, but that meant recent times were democratic
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presidents. So the Supreme Court wielded this doctrine to strike down a number of President
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Biden's actions like for example, the moratorium on eviction moratorium under COVID,
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the forgiveness of student loans, the vaccination mandate, various new climate set of climate
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regulations under the Clean Air Act. All of these were invalidated on the ground that
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the statutes invoked by the executive did not clearly give this power and they were major and
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you would expect Congress. There be some clear indication of Congress had intended to give such vast
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discretion to the President. And so that's been used a lot about by this court to strike down
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actions of the Biden administration. And you know, let me raise some eyebrows if when it comes to
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Trump administration, but they don't act the same way. I'll just end by noting briefly that
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we were really focused on identifying areas of disagreement and how the case is likely to go
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in front of the Supreme Court. Now we started with the structural fact that Congress is paralyzed
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and that causes a lot of these problems. That gives the President more of an excuse to act
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under these emergency statutes and then we have this vast expansion of presidential power.
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But then we really moved into the statutory interpretation question of whether this statute
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regulating partition allows tariffs or not. And the Nixon precedent.
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Yeah, and we will see in about a month, we'll see the arguments in the case and then as Nina
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Tottenberg always likes to say a decision is expected by June. Although I would expect that
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the Supreme Court might try and get this out a little faster than that. So I'm going to thank
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Michael McConnell again for joining us. This is Stanford Legal. If you're enjoying the show,
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please tell a friend and leave us a rating or review on your favorite podcast app.
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Your feedback improves the show and helps new listeners to discover us. I'm Pam Carlin,
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along with Diego Zembrano. See you next time.