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<v Speaker 1>To break it all down.

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<v Speaker 2>I'm pleased to have two different guests on from two

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<v Speaker 2>vantage points to dive in.

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<v Speaker 1>Philip W.

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<v Speaker 2>Magnus is a senior fellow at the Independent Institute and

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<v Speaker 2>the David J. Throw Chair in Political Economy. He's been

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<v Speaker 2>a research fellow elsewhere, has been a prolific author of

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<v Speaker 2>several books as well. I'm also pleased to be joined

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<v Speaker 2>by Thomas A. Barry, director of the Robert A. Levy

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<v Speaker 2>Center for Constitutional Studies and the editor in chief of

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<v Speaker 2>the Cato Supreme Court Review. Gentlemen, welcome to KOA. It's

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<v Speaker 2>good to talk with you both.

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<v Speaker 3>Absolutely thanks for having us, Yes, thanks for having me.

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<v Speaker 1>Thank you both for coming on.

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<v Speaker 2>So I will start with our legal expert for the beginning,

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<v Speaker 2>and that would be you, Thomas A.

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<v Speaker 1>Barry.

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<v Speaker 2>Can you break down for us, just if you boiled

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<v Speaker 2>it down, what the essence of this case is between

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<v Speaker 2>the two sides with the Trump administration is arguing in

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<v Speaker 2>the court and presented the other day, and what the

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<v Speaker 2>point of suing the federal government have said?

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<v Speaker 4>Absolutely, well, thanks for having me, and if you'll permit

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<v Speaker 4>me one brief correction. That third voice we heard talking

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<v Speaker 4>about the accretion of presidential power was Neil Gorstich.

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<v Speaker 1>Now, excuse Melito, thank you. I'm embarrassed he's from Colorado.

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<v Speaker 1>How could I?

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<v Speaker 4>Gorstich was much more skeptical of the administration than Alito.

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<v Speaker 1>Was true the argument, thank you for that clarification.

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<v Speaker 4>In a nutshell, this is about, as you said, the

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<v Speaker 4>text of AIPA, whether it allows President Trump to impose

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<v Speaker 4>these tariffs that he started on so called Liberation Day

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<v Speaker 4>as he put it, which have varied quite a bit.

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<v Speaker 4>Not every tariff he's enacted is a part of this

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<v Speaker 4>challenge because the lawsuits were filed months ago, so some

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<v Speaker 4>of the newer ones might not be an issue, though

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<v Speaker 4>their legal grounding might be undermined as well, depending on

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<v Speaker 4>the reasoning the court issues. But i EPA, this nineteen

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<v Speaker 4>seventy statute essentially has a long list of verbs and

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<v Speaker 4>nouns that the president can do if he finds that

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<v Speaker 4>there's an extraordinary and unusual threat and he declares a

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<v Speaker 4>national emergency and he claims that he needs to take

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<v Speaker 4>this action to deal with it. So among all of

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<v Speaker 4>those very long list of verbs, some of them are

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<v Speaker 4>quite broad. For example, nullify, void, prevent or prohibit importation.

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<v Speaker 4>So the president can say, you know, no one can

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<v Speaker 4>import platinum or gold or type tungsten or whatever from

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<v Speaker 4>Vietnam or China or something like that. But the keyword

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<v Speaker 4>is among those verbs is regulate, so it says the

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<v Speaker 4>president can impose in order to regulate. And then among

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<v Speaker 4>those objects of the verbs is importation. And what the

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<v Speaker 4>administration is hanging its hat on completely is that if

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<v Speaker 4>you combine those two regulate and then put in ellips's

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<v Speaker 4>importation that includes tariffs. The tariffs are essentially a regulation

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<v Speaker 4>on importation, and that they were necessary to deal with

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<v Speaker 4>the extraordinary two threats through to national emergencies, one being

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<v Speaker 4>the importation of fentanyl and the other being the so

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<v Speaker 4>called trade imbalance with various countries. And the administration's main

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<v Speaker 4>argument that they've made repeatedly in oral arguments is that

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<v Speaker 4>they don't want these tariffs. The purpose of these isn't

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<v Speaker 4>to raise revenue. This is what they're claiming now, though

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<v Speaker 4>President Trump has said some things at odds with this,

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<v Speaker 4>but their legal argument now is the purpose of this

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<v Speaker 4>isn't to raise revenue. It's to provide leverage to change

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<v Speaker 4>change people's behavior, and that the hope is that either

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<v Speaker 4>other countries will stop the flow of fentanyl, and thus

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<v Speaker 4>we won't need the tariffs anymore. So essentially the punishment ends,

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<v Speaker 4>or that manufacturing will increase in the US, the trade

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<v Speaker 4>imbalance will go away, and the things that we were

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<v Speaker 4>importing just voluntarily won't be imported anymore, and once again

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<v Speaker 4>tariffs won't be imposed. The administration's argument, in a nutshell,

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<v Speaker 4>is that they're dealing with these two extraordinary threats by

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<v Speaker 4>regulating importation and in this and tariff's count as among

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<v Speaker 4>the things encompassed by the verb regulate.

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<v Speaker 2>Let's talk for a moment, Philip Magnus about that aspect

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<v Speaker 2>of this idea of a regulatory terrorists versus revenue raising tariffs,

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<v Speaker 2>because that is part of the distinction that the administration

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<v Speaker 2>is addressing, per what Thomas Berry just told us, And

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<v Speaker 2>it's interesting to me to hear this at the same time,

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<v Speaker 2>phil that the administration, particularly President Trump, has been touting

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<v Speaker 2>all kinds of revenue coming into the federal government. Look

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<v Speaker 2>how much money we've made in America from these tariffs.

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<v Speaker 1>But before the Supreme Court, now, no, this.

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<v Speaker 2>Is about regulatory terrorists, not about making money.

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<v Speaker 3>Right right, So Trump has actually contradicted in footplop several

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<v Speaker 3>times on this particular point, including some of his own

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<v Speaker 3>court filings, and certainly is Economic advisors public documents that

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<v Speaker 3>they've released. Trump has been teuting that these tariffs, the

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<v Speaker 3>i EPA tariffs that are being challenged right now, are

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<v Speaker 3>projected to raise between about two point eight and four

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<v Speaker 3>trillion dollars in new tax revenue over the next decade.

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<v Speaker 3>And even as his lawyers are arguing this before the court,

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<v Speaker 3>the White House is tweeting out media eclipse of President

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<v Speaker 3>Trump bragging about all the revenue that's coming in even

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<v Speaker 3>an internal contradiction and messaging here, although one of them

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<v Speaker 3>they're arguing for illegal reason because they think if the

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<v Speaker 3>court accepts these tariffs as regulatory powers, they'll be granted

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<v Speaker 3>more deference in the leeway in the international arena. The

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<v Speaker 3>reason being that the tax power is so explicitly tied

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<v Speaker 3>to what Congress does in Article one, even though that's

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<v Speaker 3>as where the commerce regulation power comes from. But the

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<v Speaker 3>tax power itself is fundamentally seen as something that our

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<v Speaker 3>representatives in an elected body are supposed to have direct

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<v Speaker 3>and exclusive oversight on. So Trump wants to run away

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<v Speaker 3>from the tax claims in court even while he's making

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<v Speaker 3>them in public.

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<v Speaker 1>And kind of dovetailing in with that.

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<v Speaker 2>I want to ask you real quick of Phil Magnus,

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<v Speaker 2>because you were tweeting about this on x as well,

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<v Speaker 2>going back into the early mid well still pretty early

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<v Speaker 2>eighteen hundreds, during the nullification crisis, and you had the

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<v Speaker 2>debate that was going on there and some things you

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<v Speaker 2>were pointing out about John C. Calhoun, who's a former

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<v Speaker 2>Vice president of the United States, the seventh Vice president

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<v Speaker 2>of the United States. Talk to us a little bit

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<v Speaker 2>about what you're noticing from the Solicitor General that would

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<v Speaker 2>be the Trump administration's lawyer, John Sower, and what he

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<v Speaker 2>argued to the Supreme Court and John C.

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<v Speaker 1>Calhoun from two hundred years ago.

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<v Speaker 3>Well, that's the interesting thing. We've had all of these

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<v Speaker 3>arguments play out before it goes back to the earliest

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<v Speaker 3>days of the Republic. Because James Madison, basically the main

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<v Speaker 3>figure in the design of the Constitution and the main

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<v Speaker 3>record keeper at the Convention, introduces the first tariff bill

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<v Speaker 3>in seventeen eighty nine, and in his opening speech he says,

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<v Speaker 3>this tariff achieves two things. One is it raises revenue

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<v Speaker 3>to it regulates commerce and Madison's point was that tariffs

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<v Speaker 3>are actually a joint exercise of these two powers under Congress.

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<v Speaker 3>They are both taxes and regulation. And for your economic

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<v Speaker 3>followers out there, we also know that the economics of

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<v Speaker 3>tariffs work in this exact way. You put a tax

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<v Speaker 3>in place, it raises revenue, but it also discourages importation

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<v Speaker 3>at the same time thereby regulating it. So it's a

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<v Speaker 3>simultaneous exercise of these powers. Well, John C. Calhoun in

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<v Speaker 3>eighteen twenty eight, the US Congress passed something referred to

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<v Speaker 3>as the Tariff of Abominations. It was an extremely high

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<v Speaker 3>protective tariff following the philosophy of Henry Clay to basically

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<v Speaker 3>wall off America from foreign competition to protect our industries.

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<v Speaker 3>And Calhoun basically made the same argument. He says, this

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<v Speaker 3>is a regulatory tier if this is not a revenue tariff,

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<v Speaker 3>even though it was listed as the Revenue Act of

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<v Speaker 3>eighteen twenty eight. But Calhoun's point was, you can only

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<v Speaker 3>pick one of these two clauses at a time. It's

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<v Speaker 3>either a revenue tariff or a regulatory tariff. And he

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<v Speaker 3>had further arguments. He said that if this is a

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<v Speaker 3>regulatory tariff, it's unconstitutional because it doesn't fulfill the tax power.

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<v Speaker 3>Madison is still alive in this time, and he's still

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<v Speaker 3>writing commentaries on these debates to his friends and close associates,

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<v Speaker 3>and we have several letters from him. Madison rebukes essentially

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<v Speaker 3>the Calhoun position. He says, no, these are joint powers

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<v Speaker 3>exercise simultaneously, because every tariff does both things. It raises

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<v Speaker 3>revenue and it regulates commerce.

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<v Speaker 2>And quite honestly, I would choose the words of the

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<v Speaker 2>father of the Constitution over John C. Calhoun, and particularly

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<v Speaker 2>on that one. Again, we're joined by Philip Magnus, who

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<v Speaker 2>was an economic historian, and by constitutional scholar Thomas Barry.

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<v Speaker 2>And Thomas, I want to come back to you because

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<v Speaker 2>one of the things that I've noticed, and I think

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<v Speaker 2>you've observed this too, is that President Trump's administration has

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<v Speaker 2>been searching around what's the legal justification we can find

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<v Speaker 2>for the broadest tariffs possible. We saw a similar thing

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<v Speaker 2>with Joe Biden and his presidency on things like in

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<v Speaker 2>particular the student loans issue.

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<v Speaker 1>Can you speak to that?

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<v Speaker 2>And presidents looking for a legal justification for their chosen

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<v Speaker 2>expansions of presidential authority.

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<v Speaker 4>Yeah, that's exactly right. And this is the reason why

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<v Speaker 4>the Supreme Court has, over the last decade or so,

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<v Speaker 4>developed named doctrine. It's come to be called the Major

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<v Speaker 4>Questions doctrine. And it gets that a common sense idea,

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<v Speaker 4>which is that if the president starts with a policy

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<v Speaker 4>goal in mind, and he President Trump very much had

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<v Speaker 4>that goal in mind. He wanted tariffs, he made that

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<v Speaker 4>clear before he was elected. If he starts with a

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<v Speaker 4>policy goal in mind and then goes hunting for an

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<v Speaker 4>old statute to enact it because he can't get Congress

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<v Speaker 4>to give him what he wants, you should be more

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<v Speaker 4>skeptical about whether that legal argument is correct, especially if

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<v Speaker 4>that old statute has been around for a while but

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<v Speaker 4>has never been used in the way that the president

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<v Speaker 4>is now using it. So we saw this playout under

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<v Speaker 4>President Biden with student loan forgiveness. This was a major

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<v Speaker 4>issue in the twenty twenty election. He had a lot

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<v Speaker 4>of pressure from his base to an act student loan forgiveness.

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<v Speaker 4>Bills were introduced in Congress, but none of them could

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<v Speaker 4>get passed. So he uses an uncontroversial old statute enacted

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<v Speaker 4>during the two thousand and three Iraq War and claims

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<v Speaker 4>that it allows him to takes a very general term

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<v Speaker 4>waiver or modify provisions related to student loans, and claims

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<v Speaker 4>that modify encompasses essentially a wholesale change in the structure

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<v Speaker 4>of the student loan system, including for giving billions and

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<v Speaker 4>billions of dollars in debt. And the Supreme Court right

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<v Speaker 4>struck that down, and all of the reasoning of the

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<v Speaker 4>six justices who voted to strike that down applies just

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<v Speaker 4>as much, if not more here, And in fact, we

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<v Speaker 4>heard John Roberts, Chief Justice, who's been the biggest proponent

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<v Speaker 4>of the Major Questions doctrine, asking some pointed questions of

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<v Speaker 4>the Solicitor General about whether the Major Questions doctrine should

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<v Speaker 4>apply here as well. So I think all of that

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<v Speaker 4>reasoning that of all six justices who joined that student

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<v Speaker 4>Loan's opinion should lead them if they're being consistent to

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<v Speaker 4>strike down these tariffs.

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<v Speaker 2>Let me ask you a little more about that, Thomas Berry,

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<v Speaker 2>particularly Justices A Leado who you corrected me on before,

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<v Speaker 2>and yes, absolutely was much more a sort of friendly

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<v Speaker 2>to the government's side, which I found interesting in Justice

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<v Speaker 2>Thomas who you know, he's been speaking a lot more

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<v Speaker 2>since COVID he didn't say a word for decades, then

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<v Speaker 2>suddenly started to ask questions, and the few questions he

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<v Speaker 2>asked were, we're not.

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<v Speaker 1>So averse to this.

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<v Speaker 2>Talk to me a little bit about how you view

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<v Speaker 2>the conservative justices and their interpretation what could be here,

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<v Speaker 2>especially from their questions, and whether they will or will not.

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<v Speaker 2>I mean, obviously I'm not asking you for crystal ball.

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<v Speaker 2>May or may not line up with what they concluded

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<v Speaker 2>in the student loans case that you just mentioned.

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<v Speaker 4>Right, Alito definitely seemed to be on the administration side,

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<v Speaker 4>and it seems that to Aledo, the difference here is

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<v Speaker 4>the foreign policy aspect of this. Alito asked a lot

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<v Speaker 4>of pointed questions about what if we have, you know,

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<v Speaker 4>we're on the verge of a hot war with China,

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<v Speaker 4>or we have a hostage in a foreign hostile foreign

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<v Speaker 4>country like China that we're trying to use leverage to

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<v Speaker 4>get them out. Shouldn't the president have the maximum number

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<v Speaker 4>of tools at his disposal to put leverage on these

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<v Speaker 4>foreign countries to negotiate with them. So I'm guessing if Alito,

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<v Speaker 4>I hope, writes a dissent, not a majority opinion supporting

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<v Speaker 4>the government, he would argue that this is different from

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<v Speaker 4>the student loans case because statutes giving presidents negotiating power

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<v Speaker 4>with foreign countries should be interpreted more expansively given that

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<v Speaker 4>the way the separation of powers is designed, it is

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<v Speaker 4>understood that the president is the lead negotiator with foreign countries,

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<v Speaker 4>is the person who often makes quick decisions when an

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<v Speaker 4>emergency arises unexpectedly. Nonetheless, my response to that would be,

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<v Speaker 4>we have had two hundred years of presidents having many

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<v Speaker 4>tools at their disposal for leverage, but tariffs have never

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<v Speaker 4>been one of them. In terms of unilateral presidential policy making,

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<v Speaker 4>We've always relied on Congress to be the one to

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<v Speaker 4>spell out explicitly in statutes what the teriff rates are

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<v Speaker 4>going to be. So Congress really has always treated tariffs

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<v Speaker 4>as a different kind of thing because they're not just

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<v Speaker 4>foreign policy, they're also taxes on Americans.

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<v Speaker 1>Now, that's a great point. Thomas Berry and I would

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<v Speaker 1>tend to agree.

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<v Speaker 2>Although there's an argument from President Trump and his supporters

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<v Speaker 2>that the reason why Trump is using teriffs in this

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<v Speaker 2>way is because he views it as a negotiation tool

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<v Speaker 2>in a way that past presidents had not, and therefore

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<v Speaker 2>is justified in going about it in this way.

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<v Speaker 1>How do you respond to that, Well.

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<v Speaker 3>He's been a very erratic and unreliable negotiator here because

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<v Speaker 3>he keeps setting terms or claiming he comes to deals

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<v Speaker 3>with other countries, and then a week later he gets

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<v Speaker 3>mad at the prime minister of that other country or

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<v Speaker 3>government official. He gets mad because Canada runs a TV

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<v Speaker 3>ad quoting Ronald Reagan and decides that the deal is

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<v Speaker 3>off and he's going to change the rate. And I

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<v Speaker 3>think what this highlights is there's a deeper problem in

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<v Speaker 3>Trump's approach to IEPA. He likes IIPA because he can

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<v Speaker 3>change it on a whim with an executive order, but

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<v Speaker 3>that also means any in all of these deals that

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<v Speaker 3>he has claimed to have secured it with foreign countries

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<v Speaker 3>have no enforcement mechanism. They're not worth the paper that

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<v Speaker 3>they're written on, if they're even written on paper at all.

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<v Speaker 3>They're outside of the balance of the traditional way of

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<v Speaker 3>doing free trade agreements, which was there was a formal document,

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<v Speaker 3>an agreement drafted, and it was put before Congress, and

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<v Speaker 3>I think Congress would have to vote on it to

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<v Speaker 3>accept the terms of that agreement. Trump's done absolutely none

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<v Speaker 3>of that and is just relying on the perpetuity of

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<v Speaker 3>his own executive orders to keep these supposed deals in place.

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<v Speaker 1>Well, you just got a few minutes left.

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<v Speaker 2>I want to ask each of you a different final question,

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<v Speaker 2>a real quick film magnus. I'll throw it back to

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<v Speaker 2>you on the argument about trade imbalances and how they're

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<v Speaker 2>now viewed as a national emergency, and that is per

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<v Speaker 2>the arguments presented in court as well before the Supreme

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<v Speaker 2>Court this week, that this is part of the justification.

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<v Speaker 2>Is the trade imbalance that we have with a given

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<v Speaker 2>country a national security matter?

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<v Speaker 3>It is absolutely not, and you would not be able

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<v Speaker 3>to find any credible mainstream economist who would support that proposition.

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<v Speaker 3>In fact, we've run trade desits for basically the last

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<v Speaker 3>fifty years. We've run trade deficits for as long as

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<v Speaker 3>i EPA has been in place, and never once until

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<v Speaker 3>Donald Trump invented this new power, did anyone try to

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<v Speaker 3>use IEPA to counter this supposed emergency and the economics

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<v Speaker 3>behind it. It just comes down to basically the presidents

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<v Speaker 3>in his team, they don't understand basic accounting in the

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<v Speaker 3>international arena. They only see goods and services coming in

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<v Speaker 3>or going out of the country. They don't look at

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<v Speaker 3>all the other financial instruments. People are not giving us

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<v Speaker 3>stuff for free, and they're not taking stuff away from us.

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<v Speaker 3>There's always an exchange. And if you do a full

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<v Speaker 3>accounting of what crosses borders by definition, it's like if

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<v Speaker 3>I were to pay my bill at the grocery store,

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<v Speaker 3>there's no trade deficit that occurs because I offer money

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<v Speaker 3>in return for goods or vice versus. Someone comes into

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<v Speaker 3>a store that I own and they give me money

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<v Speaker 3>for something that I give them as a physical product.

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<v Speaker 3>It actually comes out to a balance.

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<v Speaker 2>Finally, appreciate that answer, Phil magnet So, Thomas A.

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<v Speaker 1>Berry. Let me just ask you so briefly to talk

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<v Speaker 1>a bit about.

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<v Speaker 2>The implications of what the Supreme Court might decide. How

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<v Speaker 2>do you think this may or may not go down,

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<v Speaker 2>and what could it mean for the long term, particularly

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<v Speaker 2>in so far as we consider presidential power.

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<v Speaker 4>Sure well, I was in the audience during the Supreme

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<v Speaker 4>Court argument trying to predict the votes counted justices see

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<v Speaker 4>who's giving more skeptical questions. I counted at least five

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<v Speaker 4>votes that I think are leaning against the administration. The

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<v Speaker 4>three Democratic appointees plus Justices Gorsich and Barrett, and I

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<v Speaker 4>could definitely see Chief Justice Roberts voting against the administration

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<v Speaker 4>as well, given his interest in the major questions doctrine,

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<v Speaker 4>and perhaps Justice Kavanaugh, who seemed to be a genuine

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<v Speaker 4>swing vote. He seemed genuinely concerned and pained by both

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<v Speaker 4>sides and really deep in the weeds of some of

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<v Speaker 4>the precedents. So if I had to guess, I guess

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<v Speaker 4>somewhere between five and seven votes against the administration. But

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<v Speaker 4>a lot will depend on how they write the opinion.

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<v Speaker 4>Do they try to work through all of the implications

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<v Speaker 4>of how the refunds might work for every party in

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<v Speaker 4>the country, or do they simply say the named parties

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<v Speaker 4>in this case are entitled to a refund, will leave

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<v Speaker 4>it to the lower courts to deal with claims for

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<v Speaker 4>refunds by every other affected person. If I had to guess,

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<v Speaker 4>I would guess that they would do the latter. The

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<v Speaker 4>Supreme Court usually takes the approach of lessons more so

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<v Speaker 4>there's certainly going to be much more litigation to follow

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<v Speaker 4>no matter what. And of course, there are many other

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<v Speaker 4>statutes that President Trump may use, and has said he

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<v Speaker 4>probably sure to try to direct orff some more plausible

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<v Speaker 4>than others. So we're likely to have litigation not just

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<v Speaker 4>about IEPA, but about other statutes going forward.

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<v Speaker 2>Ah years ahead of Supreme Court potentially or at least

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<v Speaker 2>legal arguments over different justifications for tariffs.

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<v Speaker 1>Oh what joy. Thomas A.

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<v Speaker 2>Berry, Director of the Cato Institute's Robert A. Levy Center

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<v Speaker 2>for Constitutional Studies, and Philip W. Magnus, Independent Institute Senior

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<v Speaker 2>Fellow and economic historian, thank you both so much for

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<v Speaker 2>your time, really interesting discussion and appreciate it today.

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<v Speaker 3>Thanks for having us, Thanks for having us.

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<v Speaker 1>Thank you both