November 5, 2025 • 25 mins
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A courtroom showdown over tariffs just forced the biggest question in trade policy: who gets to tax Americans in the name of national interest? We sat down to parse a marathon Supreme Court argument and why the Justices sounded skeptical of using emergency powers as a back door for sweeping tariffs. From first principles to practical fallout, we translate the legal jargon into plain English and outline what it could mean for markets, supply chains, and the balance of power between Congress and the White House.
We walk through the key statutes—Section 301 for unfair trade, Section 232 for national security, and IEEPA for sanctions—and explain why each has distinct guardrails. When tariffs become a foreign policy tool rather than a revenue measure, the constitutional lines blur. The bench pressed that tension hard, probing hypotheticals like climate-driven tariffs and the risk of unbounded executive authority that Congress can’t realistically unwind without a veto-proof majority. We also examine a curious idea floated at argument: replacing tariffs with “license fees” under IEEPA, and why that likely runs against the statute’s purpose.
If these tariffs are curtailed, what happens next? We explore scenarios from targeted rollbacks and importer reimbursements to narrower, evidence-based tariffs that fit within existing law. For investors, the near-term market impact may be muted compared to earnings and interest rates, but the structural payoff could be real: fewer policy whiplashes, clearer compliance, and better planning. Along the way, we offer a candid read on the Court’s likely split and how this case fits into a larger set of Capital D decisions that define the limits of presidential power.
Enjoy the conversation, then tell a friend, subscribe for more policy-to-portfolio breakdowns, and leave a review to share what you want us to tackle next.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Steve Davenpport (00:26):
Hello, it's Steve Davenport, and I'm here
with Clem Miller, and we're hereto talk about the oral
arguments in front of theSupreme Court regarding tariffs.
The tariffs issue has come tothe forefront and made this last
six to nine months um more thanwe ever wanted to know about
how much is traded with whichcountries and which ones are
(00:48):
taking advantage of us.
So I've been looking at this,and I don't think it's really
legitimate that the tariffs wereimposed in a way related to the
um emergency act, and thatthere's some kind of a national
emergency or uh something thatis needs reaction from us in
(01:08):
order to uh promulgate thesetariffs.
What do you think, Clem?
Where do you think the tariffdiscussion is going?
Is is now and will be in thefuture.
Clem Miller (01:21):
So today the Supreme Court had oral arguments
on the tariffs case, and theywent on, these oral arguments
went on for hours, hours ofdiscussion.
I mean much longer than than Ianticipated they would.
Listening ate up a lot of myday, actually.
(01:43):
I would say that that there wasa great deal of skepticism on
the part of I don't know, almosteverybody on the Supreme Court
about these tariffs.
And let me put that skepticisminto sort of several buckets.
(02:03):
First of there's the bucketthat, you know, are you know,
are tariffs actually a remedyfor uh are tariffs actually a
remedy under the InternationalEmergency Economic Powers Act?
That act has never been usedbefore uh it to uh justify
(02:27):
tariffs.
It's been used to justifyeconomic sanctions.
Steve Davenpport (02:31):
Well, isn't there some tariffs on steel that
was used as okay?
Clem Miller (02:35):
Well, steel's a different thing.
Steel is under 232.
Okay, so there's there'sseveral, so Steve, there's
several different tariffauthorities out there.
Uh one tariff authority saysthat uh you can apply, I think
it's 301, right?
That you can apply tariffs uhbasically in a sort of a tit for
(02:58):
tat basis, right?
If somebody is dumping, uh youcan apply an anti-dumping
countervailing duty, right?
So that's sort of case by case,product by product, country by
country, which is of course notthe case uh with Trump's
tariffs.
Uh or there's another one,Section 232, which is a uh an
(03:19):
act that says that uh fornational security-related uh
purposes, you can apply tariffsto commodities that are national
security.
So that's applied to steel andaluminum.
And while Trump could try to uhtry to have Section 232 apply
(03:40):
to everything, call everythingnational security, uh that would
be a huge stretch, and I thinkwould invite its own uh its own
challenges, right?
So instead, what Trump tried todo is use the this
International Economic PowersAct, which is used for things
like sanctions on Russia,sanctions on Iran, uh, you know,
(04:00):
trying to prevent um uh tryingto prevent people from, you
know, individuals from violatingsanctions, like uh exporting,
uh, you know, importing oil outof Russia and so on, trying to
use that as a justification fortariffs.
And the the the key argument uhuh at the Supreme Court today
(04:25):
was does tariff, are tariffsreally a revenue generating
device, you know, primarily orexclusively, or can they can the
tariff function be consideredto be ancillary and tariffs be
considered to be a legitimateuse of the emergency powers in a
(04:48):
foreign policy sense?
So, you know, the Trumpargument is well, we're not
really trying to collectrevenue, right?
It would be great if we coulddo things without even
collecting revenue.
This is the Trump argument.
Uh, but uh we're really youusing this to advance our
foreign policy objectives.
Steve Davenpport (05:11):
I'm not sure.
I I think the problem with theobjective to upset your foreign
policy exactly have a negativeobjective, right?
Does the court approve thingsthat are negatively skewed?
Right.
And you eliminate rights forpeople and is it is it really an
emergency if you're applyingtariffs across the world to
(05:32):
almost everybody, includingcountries with which the US has
trade surpluses, like if we wereif we were at war or if there
was a world war and we needed todo this across the board
because these people like Iagree.
I I I also look at it and say,you know, the unemployment rate
may have tipped up 0.1%, but I'mnot sure we're in an economic
(05:57):
culture, you know, crisisbecause of the market being at
all-time highs.
I'm not sure we're in afinancial one because rates are
coming down.
Clem Miller (06:05):
So one of the one of the justices said, well, you
know, maybe, you know, maybe wewere, you know, we maybe we come
under a different uhgovernment, which is much more
mindful of climate change thanthis one is.
And they say, oh, the climateis a s provides uh a serious
economic emergency, thereforewe're going to put tariffs on
(06:28):
countries that uh that generateyou know too much carbon.
You know, would this justifyit?
And they had to say, yeah, thiswould, you know, under the
Trump uh you know arguments, uh,that would be justified to put
tariffs on countries thatgenerate too much carbon.
Uh and certainly, you know, whowho wants to give that kind of
(06:51):
authority to the president,right?
The other thing, the otherthing that was brought up, and
this was Gorsuch who said this,uh, was that you know, the
peculiar way in which this wholeemergency powers act is set up
is that is that the Congress cantake back a particular
executive order that uh underthe Economic Powers Act that the
(07:14):
president has signed.
They can take it back.
They would have to vote, bothhouses have to vote, but that
particular taking back of thatpower also requir also is
subject to a presidential veto.
That means that the House andthe Senate would have to have a
V veto-proof uh majority to beable to pull back that power.
So, in other words, thepresident had would have powers
(07:38):
to apply tariffs to almosteverything, and and and and and
Congress wouldn't have theability to pull it back.
So that was a concern of uhJustice Gorsuch uh in looking at
this.
But you know, the the biggerissue is the one of you know,
tariffs are a revenue generatingdevice.
Historically, uh in theConstitution, uh the power to
(08:03):
tariff is you know is given toCongress to do, and it's not
given to the president.
Congress can delegate somethings to uh the president and
has passed laws that say, look,under these narrow conditions,
like I mentioned this thenational security uh commodities
(08:24):
like steel and aluminum, andalso uh to uh to level the
playing field in certainproducts, you know, you can use
them in those cases, but it'ssubject to strict scrutiny and
lots of uh, you know, lots of uhyou have to do studies and this
kind of thing.
You just can't, you know, whipout a blackboard and and and
(08:47):
start listing countries?
And start listing countries.
You can't just do that, right?
It's just kind of random.
Steve Davenpport (08:52):
So do they talk at all about the
significance of some of thesetariffs?
Because to me, I understand theconcept of what he's trying to
do.
I understand the frustration ofsome countries who don't treat
us well in terms of an equalopportunity.
But I I don't understand why wespend time talking about
(09:14):
Vietnam when in reality, like,is there is there any rule of
significance that you've got tosay to yourself, the president
is overstepping his boundsbecause these things have
economic significance to thepresident?
Clem Miller (09:28):
That was that was all over the discussion today.
The the issue of how much, youknow, does he really have the
power to apply tariffs acrossthe board to everybody?
Uh under this argument thatthere's uh some kind of
emergency.
Like, where's the emergency?
Is it is it, yeah, the eveneven with this, even if you call
(09:50):
a trade deficit an emergency,which is an enormous stretch
because no no past president hasever applied tariffs under the
Emergency Powers Act, much lessfor reasons of a trade deficit.
Um even if you even if you usethat, they they applied tariffs
(10:11):
also to countries with which wehave trade surpluses.
Steve Davenpport (10:14):
Right.
Clem Miller (10:15):
So it's just uh and not only and not only on top of
that, Trump has had there havebeen occasions where Trump has
kind of whimsically appliedtariffs in a random way, like
saying, Oh, we didn't like whatthe Brazilian Supreme Court did
in ruling against uh presidentuh the former president
Bolsonaro, so I'm going to applytariffs because we didn't like
(10:36):
what the Supreme Court of Brazildid.
That has absolutely nothing todo with with anything, really.
Steve Davenpport (10:43):
I think there's there's one a question
of significance, and thenthere's a question of scope, and
then there's a question of, youknow, is this even under his
authority?
And I'd say that the the partthat I understood from most of
my experience with steel was Ithink there are times when a
(11:04):
president needs to act and hedoesn't necessarily need to get
approval from Congress if somecompanies has approval.
Clem Miller (11:12):
He has approval.
Steve Davenpport (11:13):
I know he has approval for a strict, a strict
usage of something that hasnational significance, but right
these don't these don't grow tothat.
Like, can you tell me whichthings you think are most out of
line?
Is it the reach?
Is it the magnitude?
Is it the you know, what do youthink the the court will say?
(11:34):
You know, he's not even closein terms of the reason for
action, or he's not close interms of how much revenue it
would generate that it willcause this kind of uncertainty.
Like, where do you think it's agood thing?
Clem Miller (11:48):
I think I think I think the court's gonna come
down and say that that if ifthere has been a grant of tariff
authority, uh, then thepresident can use the grant of
tariff authority.
And right now there's no grantof tariff.
Steve Davenpport (12:02):
So it's unrestricted?
Clem Miller (12:04):
Well, within whatever provisions uh are
included in that grant of tariffauthority.
You know, in in 232 uh and in338, they actually have to do
some homework, right?
In order to justify thosetariffs.
It may not be a great deal ofhomework, but they have to do
some homework uh in order tojustify the 232 and the and the
(12:27):
the 301, I should say, tariffs,right?
Steve Davenpport (12:29):
Yeah.
Clem Miller (12:30):
Um so so I think, you know, but those aren't at
issue today.
At issue today is trying towedge tariffs into this
International Emergency PowersAct, which is really meant for
sanctions.
And which, which and there wasone sort of side discussion,
kind of which was kind ofinteresting, uh, that Amy Coney
(12:53):
Barrett was saying, is saying,well, you know, under the
Emergency Powers Act, uh,there's this provision for
issuing licenses.
And, you know, could couldTrump just call uh just charge
fees for licenses and uh and anddo that instead of tariffs?
(13:13):
I mean, is it is it a can he doa tariff under a different
name, a license fee?
And there was a lot of therewas some discussion about that.
And I don't think even thelawyers did a lot of homework on
that.
It was a lawyer for one of theum, it was a lawyer for uh for
somebody who submitted a friendof the court brief, amicus
(13:36):
brief, who who said who may whosaid correctly, and I I look I
know a little bit about economicsanctions from the course I
take, I teach.
Uh and and they don't chargefees for these licenses.
These licenses are exceptionsfrom sanctions or from export
controls or whatnot.
(13:56):
And they don't charge thepurpose is not to raise revenue.
The purpose of these licensesis so that uh the US can decide
whether you know a good ishumanitarian, right?
And should be allowed to go toIran or Cuba or whatnot because
it's a a humanitarian thing.
Like let's say a hurricanesweeps across Cuba.
(14:18):
We'll make exceptions in orderto provide food and and uh and
and health supplies and so on toCuba.
Um and that's what licenses arefor, right?
We don't we're not sellinglicenses uh as a as an
alternative form of tariff.
So that was that was kind of aninteresting thing.
Steve Davenpport (14:37):
We're not yet, but we could be in the future.
Clem Miller (14:39):
Right.
Steve Davenpport (14:40):
I mean, what do you think is the next step?
Like if I'm an investor andI've got to look at this issue,
(15:04):
what's the the next step, thetime frame, and how would it
ultimately let's say it wasstruck down by the court, or
let's say it was limited by thecourt to only countries or
economies that are over acertain size or have
significance?
What what do you think theimpact is for investors?
Clem Miller (15:24):
Well, I think what's gonna happen is there's
going to be a rollback of thesetariffs.
And one of the one of the infact, one of the issues that
came up today was what happensif we rule against the tariffs?
Is that gonna be a mess if wehave to do uh if if the uh US
(15:46):
government has to pay back theimporters who uh who paid these
tariffs?
How much of a disaster is thatgonna be?
And so there was there wasthere was discussion about
whether that would be a mess ornot.
Not that that's gonna bedeterminative, you know, they're
they're not gonna make adecision based on whether
there's a mess or not, right?
unknown (16:05):
Right.
Clem Miller (16:06):
But they wanted to know like how much how much of a
problem would it be?
And you know, somebody said,well, you could do, you could
say from now on, uh it would beit would be a mess.
Um and you know, somebodypointed out that you know, at a
lower court hearing, the Trumpadministration said, Oh, we'll
(16:27):
have no problem giving back thetariffs if the Supreme Court uh
rules otherwise.
So they pointed that out too,that the government actually
said that, that they thatreimbursement would be possible.
I you know, I I think itprobably would be.
And and and another person,another lawyer pointed out,
maybe it was the same lawyerpointed out that there have been
(16:47):
tariffs in the past that havebeen uh reversed, and there's
been no problem uh you knowreimbursing those tariffs.
So I think, yeah, is it wouldthat be a mess?
Yeah, it would be a mess, uh,but I think it I think it would
happen uh this uh thisreimbursement.
Steve Davenpport (17:06):
I mean, politically it would be a mess
because you've said, hey, we'veraised all this money to to make
America great, and now youdon't have that money anymore.
Right.
Clem Miller (17:15):
So well, that was that's the whole problem.
The whole problem is thatTrump's use of the emergency uh
powers act wasn't meant to raiserevenue.
unknown (17:26):
Right.
Clem Miller (17:28):
I understand, but this is revenue that Congress
never never endorsed.
Steve Davenpport (17:34):
Correct.
But let's just go along thefantasy, let's go along the
fantasy for a while and say,would the fantasy be completely
disrupted?
I think it would it would hurtpolitically if the court would
rule against him.
Do you think the court'sstructure because he appointed
three or four, you know, or howdo you think his appointees and
(17:57):
that situation do you believe inthe purity of the court,
meaning that they're gonna finda right solution, or do you
think it is still a politicaldecision and that's what's gonna
guide the ultimate decision?
Clem Miller (18:10):
Well, he needs he needs five on the court.
And I don't think he's gonnaget five.
Steve Davenpport (18:18):
So So who's not gonna go?
What?
Clem Miller (18:23):
Who do you think is gonna be the who's gonna side
with uh who's gonna side withTrump?
I think it's gonna be Alito,definitely.
Uh I think it's gonna beKavanaugh, and I think probably
Thomas.
I think those are the three.
So I think it's gonna be a uhsix to three decision uh against
(18:45):
Trump.
Steve Davenpport (18:51):
Roberts.
Roberts.
Yeah.
Okay.
Um, I mean I I think it's oneof those things on the radar,
but I kind of have a questionabout significance here.
I mean, I'm not I'm not sure.
I think it's politicallyimportant and I think it's
structurally important that wedo the right things and we try
(19:12):
to get our allies in a betterplace.
But I guess I'm just not sureuh I'm gonna make a trade in my
portfolio based on how the courtrules or doesn't rule.
Clem Miller (19:24):
I agree with you.
I agree with you.
I think you know the market wasup is up today a lot.
I'm uh I think that's uh uh youknow mostly due to the fact
that it was down yesterday,right?
And it's recovering.
Uh so I I don't know how muchof the up I can attribute to the
Supreme Court hearing.
What the Supreme Court willcome up with in this case
(19:45):
precisely, I don't know, right?
I think it'll strike down thethe my guess, just my guess, I
think it'll strike down thetariffs as they're being
implemented now, uh, and maybeprovide some guidance as to what
kinds of tariffs uh might beacceptable.
Uh I don't think they'll lookyou know anything like what
(20:08):
we've got right now.
They won't be as sweeping andthey won't be as uh uh they
won't they won't provide Trump atool that he can use in a
whimsical fashion like he's beenusing them now.
Steve Davenpport (20:25):
Okay.
Clem Miller (20:26):
That's that was that would be my guess as to uh
as to what's going to happen.
So uh which I you know Ipersonally think is a good
outcome because I think tariffsare a a drag on the U.S.
economy.
Steve Davenpport (20:39):
Yeah, I think we both agree that economically
tariffs are an inefficient wayto do something.
So I don't think we have adisagreement on the fundamentals
of of tariffs being good orbad.
I just have it, you know, Ijust think it's a a case of is
the Supreme Court really theSupreme Court of all the people,
or is the Supreme Court theSupreme Court of Trump, which
(21:01):
many people are saying, right?
Well, we'll see.
Yeah, and that's what I thinkis more important almost than
what the issue is, or right, isis how do they vote when it
really comes down to an issuethat should have so Steve, on
that point, you know, there havebeen a number of rulings that
have gone in favor of Trump, buta lot of those rulings have
(21:25):
been ones where they haven't hadoral arguments like this.
Clem Miller (21:29):
Oh, where they've been basically overturning
stays, you know, injunctions bylower courts.
Steve Davenpport (21:36):
Yeah.
Clem Miller (21:37):
So really, they're just like like, you know, let's
put a pin in something anddiscuss it later.
Let's, you know, let's holdthat for now and we'll discuss
it later.
These those are the kinds ofdecisions we've had so far,
which are kind of decisions witha lowercase d.
This case is a decision with awith a capital D.
Steve Davenpport (21:59):
Correct.
Clem Miller (22:00):
Birthright citizenship will be a decision
with a capital D.
Steve Davenpport (22:05):
Is that on the next?
Clem Miller (22:07):
And uh when we get around to discussing um you
know, immigration and nationalguard, I think ultimately those
will be decisions also with acapital D.
Because those are the big,those are those big decisions.
So I think those are, you know,those are the decisions where,
(22:29):
you know, we'll really see thetrue character of the Supreme
Court come out.
I think in this case, I'vealready given you my opinion in
this case, in the birthrightcitizenship, uh, I think they're
gonna rule against Trump.
Uh, and I also think they'regonna have problems uh with the
whole National Guard issue.
Uh, you know, we're not talkingabout the National Guard in
(22:52):
this call, but I'll just saythat that, you know, that it
went up to the Supreme Court,this um Illinois case, and Amy
Coney Barrett wrote back with aquestion, uh, which was kind of
an interesting question.
Like, what do you consider tobe regular forces of the United
States?
And that's in the context ofyou only call up the National
(23:12):
Guard when the regular forcescan't achieve what you want to
achieve.
But and uh, and so there's aquestion, you know, are the
regular forces like the army andthe navy and the or the regular
forces like ICE?
Right?
Steve Davenpport (23:28):
And yeah, I think there's I think there's
quite a few forces that werenot, um, and and I think we've
been working on the fringes, butI I I think this issue uh is
important with a capital D, butuh as in terms of our investors
out there, I'd say, you know,listen and learn, but I'm not
sure your portfolio is going tochange one way or another based
(23:51):
on this issue.
So do you have any lastcomments?
Clem Miller (23:54):
I agree.
I agree with that.
Steve Davenpport (23:56):
Yeah.
Okay, everybody, thank you forlistening.
And we just thought that we'dthrow this issue in because it's
current, it's happening today,and we want to give you the
latest on what's happening inthe news and try to understand
its relevance to your portfolioand your financial wellness.
So thanks everybody forlistening, and we appreciate
(24:19):
your tuning in.
Please share with your friendsand uh family and let us know
what we can do to make ourpodcast better.
Thanks again.
Hello, it's Steve Davenport, and I'm here
with Clem Miller, and we're hereto talk about the oral
arguments in front of theSupreme Court regarding tariffs.
The tariffs issue has come tothe forefront and made this last
six to nine months um more thanwe ever wanted to know about
how much is traded with whichcountries and which ones are
(00:48):
taking advantage of us.
So I've been looking at this,and I don't think it's really
legitimate that the tariffs wereimposed in a way related to the
um emergency act, and thatthere's some kind of a national
emergency or uh something thatis needs reaction from us in
(01:08):
order to uh promulgate thesetariffs.
What do you think, Clem?
Where do you think the tariffdiscussion is going?
Is is now and will be in thefuture.
Clem Miller (01:21):
So today the Supreme Court had oral arguments
on the tariffs case, and theywent on, these oral arguments
went on for hours, hours ofdiscussion.
I mean much longer than than Ianticipated they would.
Listening ate up a lot of myday, actually.
(01:43):
I would say that that there wasa great deal of skepticism on
the part of I don't know, almosteverybody on the Supreme Court
about these tariffs.
And let me put that skepticisminto sort of several buckets.
(02:03):
First of there's the bucketthat, you know, are you know,
are tariffs actually a remedyfor uh are tariffs actually a
remedy under the InternationalEmergency Economic Powers Act?
That act has never been usedbefore uh it to uh justify
(02:27):
tariffs.
It's been used to justifyeconomic sanctions.
Steve Davenpport (02:31):
Well, isn't there some tariffs on steel that
was used as okay?
Clem Miller (02:35):
Well, steel's a different thing.
Steel is under 232.
Okay, so there's there'sseveral, so Steve, there's
several different tariffauthorities out there.
Uh one tariff authority saysthat uh you can apply, I think
it's 301, right?
That you can apply tariffs uhbasically in a sort of a tit for
(02:58):
tat basis, right?
If somebody is dumping, uh youcan apply an anti-dumping
countervailing duty, right?
So that's sort of case by case,product by product, country by
country, which is of course notthe case uh with Trump's
tariffs.
Uh or there's another one,Section 232, which is a uh an
(03:19):
act that says that uh fornational security-related uh
purposes, you can apply tariffsto commodities that are national
security.
So that's applied to steel andaluminum.
And while Trump could try to uhtry to have Section 232 apply
(03:40):
to everything, call everythingnational security, uh that would
be a huge stretch, and I thinkwould invite its own uh its own
challenges, right?
So instead, what Trump tried todo is use the this
International Economic PowersAct, which is used for things
like sanctions on Russia,sanctions on Iran, uh, you know,
(04:00):
trying to prevent um uh tryingto prevent people from, you
know, individuals from violatingsanctions, like uh exporting,
uh, you know, importing oil outof Russia and so on, trying to
use that as a justification fortariffs.
And the the the key argument uhuh at the Supreme Court today
(04:25):
was does tariff, are tariffsreally a revenue generating
device, you know, primarily orexclusively, or can they can the
tariff function be consideredto be ancillary and tariffs be
considered to be a legitimateuse of the emergency powers in a
(04:48):
foreign policy sense?
So, you know, the Trumpargument is well, we're not
really trying to collectrevenue, right?
It would be great if we coulddo things without even
collecting revenue.
This is the Trump argument.
Uh, but uh we're really youusing this to advance our
foreign policy objectives.
Steve Davenpport (05:11):
I'm not sure.
I I think the problem with theobjective to upset your foreign
policy exactly have a negativeobjective, right?
Does the court approve thingsthat are negatively skewed?
Right.
And you eliminate rights forpeople and is it is it really an
emergency if you're applyingtariffs across the world to
(05:32):
almost everybody, includingcountries with which the US has
trade surpluses, like if we wereif we were at war or if there
was a world war and we needed todo this across the board
because these people like Iagree.
I I I also look at it and say,you know, the unemployment rate
may have tipped up 0.1%, but I'mnot sure we're in an economic
(05:57):
culture, you know, crisisbecause of the market being at
all-time highs.
I'm not sure we're in afinancial one because rates are
coming down.
Clem Miller (06:05):
So one of the one of the justices said, well, you
know, maybe, you know, maybe wewere, you know, we maybe we come
under a different uhgovernment, which is much more
mindful of climate change thanthis one is.
And they say, oh, the climateis a s provides uh a serious
economic emergency, thereforewe're going to put tariffs on
(06:28):
countries that uh that generateyou know too much carbon.
You know, would this justifyit?
And they had to say, yeah, thiswould, you know, under the
Trump uh you know arguments, uh,that would be justified to put
tariffs on countries thatgenerate too much carbon.
Uh and certainly, you know, whowho wants to give that kind of
(06:51):
authority to the president,right?
The other thing, the otherthing that was brought up, and
this was Gorsuch who said this,uh, was that you know, the
peculiar way in which this wholeemergency powers act is set up
is that is that the Congress cantake back a particular
executive order that uh underthe Economic Powers Act that the
(07:14):
president has signed.
They can take it back.
They would have to vote, bothhouses have to vote, but that
particular taking back of thatpower also requir also is
subject to a presidential veto.
That means that the House andthe Senate would have to have a
V veto-proof uh majority to beable to pull back that power.
So, in other words, thepresident had would have powers
(07:38):
to apply tariffs to almosteverything, and and and and and
Congress wouldn't have theability to pull it back.
So that was a concern of uhJustice Gorsuch uh in looking at
this.
But you know, the the biggerissue is the one of you know,
tariffs are a revenue generatingdevice.
Historically, uh in theConstitution, uh the power to
(08:03):
tariff is you know is given toCongress to do, and it's not
given to the president.
Congress can delegate somethings to uh the president and
has passed laws that say, look,under these narrow conditions,
like I mentioned this thenational security uh commodities
(08:24):
like steel and aluminum, andalso uh to uh to level the
playing field in certainproducts, you know, you can use
them in those cases, but it'ssubject to strict scrutiny and
lots of uh, you know, lots of uhyou have to do studies and this
kind of thing.
You just can't, you know, whipout a blackboard and and and
(08:47):
start listing countries?
And start listing countries.
You can't just do that, right?
It's just kind of random.
Steve Davenpport (08:52):
So do they talk at all about the
significance of some of thesetariffs?
Because to me, I understand theconcept of what he's trying to
do.
I understand the frustration ofsome countries who don't treat
us well in terms of an equalopportunity.
But I I don't understand why wespend time talking about
(09:14):
Vietnam when in reality, like,is there is there any rule of
significance that you've got tosay to yourself, the president
is overstepping his boundsbecause these things have
economic significance to thepresident?
Clem Miller (09:28):
That was that was all over the discussion today.
The the issue of how much, youknow, does he really have the
power to apply tariffs acrossthe board to everybody?
Uh under this argument thatthere's uh some kind of
emergency.
Like, where's the emergency?
Is it is it, yeah, the eveneven with this, even if you call
(09:50):
a trade deficit an emergency,which is an enormous stretch
because no no past president hasever applied tariffs under the
Emergency Powers Act, much lessfor reasons of a trade deficit.
Um even if you even if you usethat, they they applied tariffs
(10:11):
also to countries with which wehave trade surpluses.
Steve Davenpport (10:14):
Right.
Clem Miller (10:15):
So it's just uh and not only and not only on top of
that, Trump has had there havebeen occasions where Trump has
kind of whimsically appliedtariffs in a random way, like
saying, Oh, we didn't like whatthe Brazilian Supreme Court did
in ruling against uh presidentuh the former president
Bolsonaro, so I'm going to applytariffs because we didn't like
(10:36):
what the Supreme Court of Brazildid.
That has absolutely nothing todo with with anything, really.
Steve Davenpport (10:43):
I think there's there's one a question
of significance, and thenthere's a question of scope, and
then there's a question of, youknow, is this even under his
authority?
And I'd say that the the partthat I understood from most of
my experience with steel was Ithink there are times when a
(11:04):
president needs to act and hedoesn't necessarily need to get
approval from Congress if somecompanies has approval.
Clem Miller (11:12):
He has approval.
Steve Davenpport (11:13):
I know he has approval for a strict, a strict
usage of something that hasnational significance, but right
these don't these don't grow tothat.
Like, can you tell me whichthings you think are most out of
line?
Is it the reach?
Is it the magnitude?
Is it the you know, what do youthink the the court will say?
(11:34):
You know, he's not even closein terms of the reason for
action, or he's not close interms of how much revenue it
would generate that it willcause this kind of uncertainty.
Like, where do you think it's agood thing?
Clem Miller (11:48):
I think I think I think the court's gonna come
down and say that that if ifthere has been a grant of tariff
authority, uh, then thepresident can use the grant of
tariff authority.
And right now there's no grantof tariff.
Steve Davenpport (12:02):
So it's unrestricted?
Clem Miller (12:04):
Well, within whatever provisions uh are
included in that grant of tariffauthority.
You know, in in 232 uh and in338, they actually have to do
some homework, right?
In order to justify thosetariffs.
It may not be a great deal ofhomework, but they have to do
some homework uh in order tojustify the 232 and the and the
(12:27):
the 301, I should say, tariffs,right?
Steve Davenpport (12:29):
Yeah.
Clem Miller (12:30):
Um so so I think, you know, but those aren't at
issue today.
At issue today is trying towedge tariffs into this
International Emergency PowersAct, which is really meant for
sanctions.
And which, which and there wasone sort of side discussion,
kind of which was kind ofinteresting, uh, that Amy Coney
(12:53):
Barrett was saying, is saying,well, you know, under the
Emergency Powers Act, uh,there's this provision for
issuing licenses.
And, you know, could couldTrump just call uh just charge
fees for licenses and uh and anddo that instead of tariffs?
(13:13):
I mean, is it is it a can he doa tariff under a different
name, a license fee?
And there was a lot of therewas some discussion about that.
And I don't think even thelawyers did a lot of homework on
that.
It was a lawyer for one of theum, it was a lawyer for uh for
somebody who submitted a friendof the court brief, amicus
(13:36):
brief, who who said who may whosaid correctly, and I I look I
know a little bit about economicsanctions from the course I
take, I teach.
Uh and and they don't chargefees for these licenses.
These licenses are exceptionsfrom sanctions or from export
controls or whatnot.
(13:56):
And they don't charge thepurpose is not to raise revenue.
The purpose of these licensesis so that uh the US can decide
whether you know a good ishumanitarian, right?
And should be allowed to go toIran or Cuba or whatnot because
it's a a humanitarian thing.
Like let's say a hurricanesweeps across Cuba.
(14:18):
We'll make exceptions in orderto provide food and and uh and
and health supplies and so on toCuba.
Um and that's what licenses arefor, right?
We don't we're not sellinglicenses uh as a as an
alternative form of tariff.
So that was that was kind of aninteresting thing.
Steve Davenpport (14:37):
We're not yet, but we could be in the future.
Clem Miller (14:39):
Right.
Steve Davenpport (14:40):
I mean, what do you think is the next step?
Like if I'm an investor andI've got to look at this issue,
(15:04):
what's the the next step, thetime frame, and how would it
ultimately let's say it wasstruck down by the court, or
let's say it was limited by thecourt to only countries or
economies that are over acertain size or have
significance?
What what do you think theimpact is for investors?
Clem Miller (15:24):
Well, I think what's gonna happen is there's
going to be a rollback of thesetariffs.
And one of the one of the infact, one of the issues that
came up today was what happensif we rule against the tariffs?
Is that gonna be a mess if wehave to do uh if if the uh US
(15:46):
government has to pay back theimporters who uh who paid these
tariffs?
How much of a disaster is thatgonna be?
And so there was there wasthere was discussion about
whether that would be a mess ornot.
Not that that's gonna bedeterminative, you know, they're
they're not gonna make adecision based on whether
there's a mess or not, right?
unknown (16:05):
Right.
Clem Miller (16:06):
But they wanted to know like how much how much of a
problem would it be?
And you know, somebody said,well, you could do, you could
say from now on, uh it would beit would be a mess.
Um and you know, somebodypointed out that you know, at a
lower court hearing, the Trumpadministration said, Oh, we'll
(16:27):
have no problem giving back thetariffs if the Supreme Court uh
rules otherwise.
So they pointed that out too,that the government actually
said that, that they thatreimbursement would be possible.
I you know, I I think itprobably would be.
And and and another person,another lawyer pointed out,
maybe it was the same lawyerpointed out that there have been
(16:47):
tariffs in the past that havebeen uh reversed, and there's
been no problem uh you knowreimbursing those tariffs.
So I think, yeah, is it wouldthat be a mess?
Yeah, it would be a mess, uh,but I think it I think it would
happen uh this uh thisreimbursement.
Steve Davenpport (17:06):
I mean, politically it would be a mess
because you've said, hey, we'veraised all this money to to make
America great, and now youdon't have that money anymore.
Right.
Clem Miller (17:15):
So well, that was that's the whole problem.
The whole problem is thatTrump's use of the emergency uh
powers act wasn't meant to raiserevenue.
unknown (17:26):
Right.
Clem Miller (17:28):
I understand, but this is revenue that Congress
never never endorsed.
Steve Davenpport (17:34):
Correct.
But let's just go along thefantasy, let's go along the
fantasy for a while and say,would the fantasy be completely
disrupted?
I think it would it would hurtpolitically if the court would
rule against him.
Do you think the court'sstructure because he appointed
three or four, you know, or howdo you think his appointees and
(17:57):
that situation do you believe inthe purity of the court,
meaning that they're gonna finda right solution, or do you
think it is still a politicaldecision and that's what's gonna
guide the ultimate decision?
Clem Miller (18:10):
Well, he needs he needs five on the court.
And I don't think he's gonnaget five.
Steve Davenpport (18:18):
So So who's not gonna go?
What?
Clem Miller (18:23):
Who do you think is gonna be the who's gonna side
with uh who's gonna side withTrump?
I think it's gonna be Alito,definitely.
Uh I think it's gonna beKavanaugh, and I think probably
Thomas.
I think those are the three.
So I think it's gonna be a uhsix to three decision uh against
(18:45):
Trump.
Steve Davenpport (18:51):
Roberts.
Roberts.
Yeah.
Okay.
Um, I mean I I think it's oneof those things on the radar,
but I kind of have a questionabout significance here.
I mean, I'm not I'm not sure.
I think it's politicallyimportant and I think it's
structurally important that wedo the right things and we try
(19:12):
to get our allies in a betterplace.
But I guess I'm just not sureuh I'm gonna make a trade in my
portfolio based on how the courtrules or doesn't rule.
Clem Miller (19:24):
I agree with you.
I agree with you.
I think you know the market wasup is up today a lot.
I'm uh I think that's uh uh youknow mostly due to the fact
that it was down yesterday,right?
And it's recovering.
Uh so I I don't know how muchof the up I can attribute to the
Supreme Court hearing.
What the Supreme Court willcome up with in this case
(19:45):
precisely, I don't know, right?
I think it'll strike down thethe my guess, just my guess, I
think it'll strike down thetariffs as they're being
implemented now, uh, and maybeprovide some guidance as to what
kinds of tariffs uh might beacceptable.
Uh I don't think they'll lookyou know anything like what
(20:08):
we've got right now.
They won't be as sweeping andthey won't be as uh uh they
won't they won't provide Trump atool that he can use in a
whimsical fashion like he's beenusing them now.
Steve Davenpport (20:25):
Okay.
Clem Miller (20:26):
That's that was that would be my guess as to uh
as to what's going to happen.
So uh which I you know Ipersonally think is a good
outcome because I think tariffsare a a drag on the U.S.
economy.
Steve Davenpport (20:39):
Yeah, I think we both agree that economically
tariffs are an inefficient wayto do something.
So I don't think we have adisagreement on the fundamentals
of of tariffs being good orbad.
I just have it, you know, Ijust think it's a a case of is
the Supreme Court really theSupreme Court of all the people,
or is the Supreme Court theSupreme Court of Trump, which
(21:01):
many people are saying, right?
Well, we'll see.
Yeah, and that's what I thinkis more important almost than
what the issue is, or right, isis how do they vote when it
really comes down to an issuethat should have so Steve, on
that point, you know, there havebeen a number of rulings that
have gone in favor of Trump, buta lot of those rulings have
(21:25):
been ones where they haven't hadoral arguments like this.
Clem Miller (21:29):
Oh, where they've been basically overturning
stays, you know, injunctions bylower courts.
Steve Davenpport (21:36):
Yeah.
Clem Miller (21:37):
So really, they're just like like, you know, let's
put a pin in something anddiscuss it later.
Let's, you know, let's holdthat for now and we'll discuss
it later.
These those are the kinds ofdecisions we've had so far,
which are kind of decisions witha lowercase d.
This case is a decision with awith a capital D.
Steve Davenpport (21:59):
Correct.
Clem Miller (22:00):
Birthright citizenship will be a decision
with a capital D.
Steve Davenpport (22:05):
Is that on the next?
Clem Miller (22:07):
And uh when we get around to discussing um you
know, immigration and nationalguard, I think ultimately those
will be decisions also with acapital D.
Because those are the big,those are those big decisions.
So I think those are, you know,those are the decisions where,
(22:29):
you know, we'll really see thetrue character of the Supreme
Court come out.
I think in this case, I'vealready given you my opinion in
this case, in the birthrightcitizenship, uh, I think they're
gonna rule against Trump.
Uh, and I also think they'regonna have problems uh with the
whole National Guard issue.
Uh, you know, we're not talkingabout the National Guard in
(22:52):
this call, but I'll just saythat that, you know, that it
went up to the Supreme Court,this um Illinois case, and Amy
Coney Barrett wrote back with aquestion, uh, which was kind of
an interesting question.
Like, what do you consider tobe regular forces of the United
States?
And that's in the context ofyou only call up the National
(23:12):
Guard when the regular forcescan't achieve what you want to
achieve.
But and uh, and so there's aquestion, you know, are the
regular forces like the army andthe navy and the or the regular
forces like ICE?
Right?
Steve Davenpport (23:28):
And yeah, I think there's I think there's
quite a few forces that werenot, um, and and I think we've
been working on the fringes, butI I I think this issue uh is
important with a capital D, butuh as in terms of our investors
out there, I'd say, you know,listen and learn, but I'm not
sure your portfolio is going tochange one way or another based
(23:51):
on this issue.
So do you have any lastcomments?
Clem Miller (23:54):
I agree.
I agree with that.
Steve Davenpport (23:56):
Yeah.
Okay, everybody, thank you forlistening.
And we just thought that we'dthrow this issue in because it's
current, it's happening today,and we want to give you the
latest on what's happening inthe news and try to understand
its relevance to your portfolioand your financial wellness.
So thanks everybody forlistening, and we appreciate
(24:19):
your tuning in.
Please share with your friendsand uh family and let us know
what we can do to make ourpodcast better.
Thanks again.
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