May 29, 2025 • 8 mins
It’s been a whirlwind 24 hours in tariff news: first, a trade court blocked Trump’s sweeping new tariffs, calling them executive overreach. Then, a federal appeals court reinstated them—at least for now. We break down what happened, what’s next, and why it matters.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Kyle Hulehan (00:00):
So we have some breaking news on tariffs right
now.
Um, it's been a crazy 24 hours.
There's been a lot going on.
I feel like Erica, every timewe're talking it usually
includes tariffs.
I guess recently the one bigbeautiful bill.
But, um, there's been some bignews.
A lot is changing and happeningliterally right now in like the
past hour stuff has changed.
Uh, so could you just break downfor people what's going on,
(00:22):
what's in the news and what'schanging about tariffs?
Erica York (00:24):
On Wednesday, May 28th, the US Court of
International Trade ruled thatTrump's emergency economic
powers, tariffs were illegal.
So that's.
The so-called fentanyl tariffsthat were placed on Canada,
Mexico, and China, as well asthe April 2nd reciprocal
tariffs.
(00:45):
Um, that's the 10% baselinetariff on virtually all
countries, plus these.
Additional scheduled increasesthat were maybe going to come in
July.
Um, all of those by that courtorder were, were ruled illegal,
and that ruling, uh, gave thepresident 10 days to figure out
(01:05):
how to end the tariffs as wellas rebate any tariffs already
paid.
Back to importers who, who facedthose tariff bills?
Um, we knew yesterday that theTrump administration would
appeal this decision.
They have appealed and just inthe last hour, um, uh, the
ruling came out from that, or,um, you know, I'm not a lawyer,
(01:28):
so I may not be using the exactright, like legal terms, but
the, that appeals court stayedthe decision, which means that,
um, the tariffs are now backinto effect.
So we had like a.
14 hour break from these tariffsand rebates were maybe gonna be
issued.
And now that is frozen in placeand the court has given a really
(01:48):
short turnaround time for, um.
Appeals to to be made.
So this is a really fast movingprocess and it just like
heightens the uncertainty that,that we're already seeing with
tariffs.
So it's probably illegal forTrump to do these kind of like
willy-nilly universal worldwidetariffs.
Uh, but we don't know how theappeals court is going to rule.
Kyle Hulehan (02:10):
What do you see as the president's authority in
terms of, of tariffs?
Like how, how do you break thisdown?
Erica York (02:17):
So for these emergency tariffs, he used this
1977 law that doesn't actuallyeven use the word tariff in it.
It's some like emergencyeconomic powers that Trump used
because it made it really easyfor him to do what.
Ever type of tariff he wantedwithout any type of
investigation.
Um, and that's what the courthas said, like, no, this is way
(02:38):
too broad.
The president does have tariffauthorities under these other
statutes, but those are reallyspecific.
You have to follow certaininvestigations, certain
processes, certain timelines.
Um, the president doesn't justhave unilateral authority to
impose tariffs on everyone.
And with the fentanyl tariffsspecifically, they said like.
(02:59):
The tariffs that he did were notreally directly related to
fentanyl.
He did tariffs on everythingfrom China.
Um, everything non USMC, anon-trade agreement from Canada
and Mexico that's not related tofentanyl at all.
So in that case, it was toobroad.
It was an abuse of theauthority.
So I think it's a really goodsign that the courts are
(03:20):
stepping up and saying, Hey,there are rules here that have
to be followed.
If you want to do tariffs, youhave to go through these
specific processes that.
Congress has granted thepresident to have in order to
impose tariffs.
But you can't just like decideone day to do 145% tariff on
China because of some, you know,nebulous economic emergency.
(03:42):
I.
Kyle Hulehan (03:42):
And so what effects do these, let's call
them willy-nilly tariffs, youknow, have, when you're kind of
just pushing a tariff out,pushing an idea out what happens
when he does this?
Erica York (03:53):
So there's two things.
One is uncertainty.
Um, and uncertainty itself actslike a tax on the economy.
If you're a business, if you'rea person trying to make a
decision and you don't know ifthat decision is going to face a
145% tax or a 10% tax, or maybeno tax, you're gonna wait.
Until you have some certaintybefore you make a big decision.
(04:13):
And whether that's hiring,whether that's starting a new
line of business, um, whetherthat's expanding the types of
products you offer, that's allgonna get held up.
Um, so investment stops justbecause of the uncertainty.
And then if the tariff actually.
Is in place, then that createsthis big tax burden.
You have higher costs if you'rea business.
(04:33):
If you're a consumer, you mightbe paying a higher price for
something and that reduces yourincome.
It reduces your incentives toinvest and work in the long
term.
Um, so you have both of thosechannels of negative effects.
And in our projections at TaxFoundation, we focus on that
second type of effect, theactual direct effect of the tax
on the economy, not the effectof uncertainty, because that's.
(04:55):
Really difficult to, to try totangle out.
But what we've found in ourestimates is that these
so-called I EPA tariffs, theEmergency economic powers,
tariffs, um, they drive aboutthree fourths of the long run
harm of all of the tariffs.
Um, the remaining tariffs arepretty narrow in scope compared
to the emergency tariffs, andthose remaining tariffs went
(05:17):
through the processes that thatCongress has delegated to the
president.
Um, so National Securityinvestigations, findings issued
public comment periods, thoseresulted in specific product
tariffs on steel, aluminumautos.
There are more investigationspending.
Um.
Those are relatively narrow inscope, and so they drive a
(05:40):
smaller amount of the economicharm that we project.
but right now there's like a$1.4trillion tax increase up in the
air depending on which way the,the court rules.
One of the big things we've seenthe Trump administration say in
the past few weeks especially,is that the revenues from these
tariffs are gonna help reducethe deficit.
They've talked about, you know,billions and billions of dollars
(06:03):
a day coming in.
Those numbers are too high, butwe have seen tariff payments.
Go up significantly because ofthis broad 10% tariff and these
other tariffs on Canada, China,and Mexico, especially if those
are taken off the table.
And if the government has torebate those tariff payments
potentially with interest, uh,that.
(06:25):
Just washes out this entireargument, and it points in favor
of what several people have beensaying.
The revenue from tariffs ishighly uncertain, not only
because of the bad economicimpact, but because of the shaky
legal ground that the tariffswere imposed on.
Um, and so lawmakers in Congressespecially should not count on
significant tariff revenuesbecause of this legal
(06:47):
uncertainty.
Kyle Hulehan (06:47):
That is a lot of money and I don't think anybody
wants prices to be higher, youknow, it was really nice for
like 14 hours to be liberatedfrom tariffs, actually.
But, you know, I'm justwondering, Erica, is there, is
there anything else about thisthat you want to hit on that you
need to let the people know?
Erica York (07:04):
Uh, I mean the, the arguments were really clear in,
in this ruling.
Um, and I think, you know, it'sa really strong chance, at least
I hope.
That the ruling gets upheld, um,that this was an abuse of
authority, that the presidentcannot just unilaterally impose
a huge sweeping tax on theAmerican economy.
(07:27):
You know, this is a$1.4 trilliontax hike over the next decade
that the president did.
By just like signing anexecutive order, um, that is so
far out of the bounds of whatCongress has delegated the
president to be able to do ontrade and tariffs.
And so it's, you know, it's agood sign that this has been
(07:49):
potentially stricken down.
Um, hopefully that stands andhopefully it means that American
taxpayers in the US economy.
Can avoid the worst of thesetariff hikes.
I don't think that means alltariff hikes are off the table.
I think if this channel is shutoff by the courts, we're likely
to see the Trump administrationuse these other channels.
(08:10):
Um, but those will have to gothrough like a regular process
and there will be a lot moretransparency associated with
that as opposed to this.
A tariff where Trump can just,you know, change the rate
depending on the day, dependingon the news.
Um, that's really bad for theeconomy if he is able to
continue doing that.
Kyle Hulehan (08:29):
Yeah, and I think it's nice to see that maybe the
division of Powers is, isworking here with our three
branches and we're getting alittle bit of movement.
On these things.
Um, Erica, thank you so much forbreaking this down for us.
I appreciate that so much.
Erica York (08:42):
Thanks, Kyle.
So we have some breaking news on tariffs right
now.
Um, it's been a crazy 24 hours.
There's been a lot going on.
I feel like Erica, every timewe're talking it usually
includes tariffs.
I guess recently the one bigbeautiful bill.
But, um, there's been some bignews.
A lot is changing and happeningliterally right now in like the
past hour stuff has changed.
Uh, so could you just break downfor people what's going on,
(00:22):
what's in the news and what'schanging about tariffs?
Erica York (00:24):
On Wednesday, May 28th, the US Court of
International Trade ruled thatTrump's emergency economic
powers, tariffs were illegal.
So that's.
The so-called fentanyl tariffsthat were placed on Canada,
Mexico, and China, as well asthe April 2nd reciprocal
tariffs.
(00:45):
Um, that's the 10% baselinetariff on virtually all
countries, plus these.
Additional scheduled increasesthat were maybe going to come in
July.
Um, all of those by that courtorder were, were ruled illegal,
and that ruling, uh, gave thepresident 10 days to figure out
(01:05):
how to end the tariffs as wellas rebate any tariffs already
paid.
Back to importers who, who facedthose tariff bills?
Um, we knew yesterday that theTrump administration would
appeal this decision.
They have appealed and just inthe last hour, um, uh, the
ruling came out from that, or,um, you know, I'm not a lawyer,
(01:28):
so I may not be using the exactright, like legal terms, but
the, that appeals court stayedthe decision, which means that,
um, the tariffs are now backinto effect.
So we had like a.
14 hour break from these tariffsand rebates were maybe gonna be
issued.
And now that is frozen in placeand the court has given a really
(01:48):
short turnaround time for, um.
Appeals to to be made.
So this is a really fast movingprocess and it just like
heightens the uncertainty that,that we're already seeing with
tariffs.
So it's probably illegal forTrump to do these kind of like
willy-nilly universal worldwidetariffs.
Uh, but we don't know how theappeals court is going to rule.
Kyle Hulehan (02:10):
What do you see as the president's authority in
terms of, of tariffs?
Like how, how do you break thisdown?
Erica York (02:17):
So for these emergency tariffs, he used this
1977 law that doesn't actuallyeven use the word tariff in it.
It's some like emergencyeconomic powers that Trump used
because it made it really easyfor him to do what.
Ever type of tariff he wantedwithout any type of
investigation.
Um, and that's what the courthas said, like, no, this is way
(02:38):
too broad.
The president does have tariffauthorities under these other
statutes, but those are reallyspecific.
You have to follow certaininvestigations, certain
processes, certain timelines.
Um, the president doesn't justhave unilateral authority to
impose tariffs on everyone.
And with the fentanyl tariffsspecifically, they said like.
(02:59):
The tariffs that he did were notreally directly related to
fentanyl.
He did tariffs on everythingfrom China.
Um, everything non USMC, anon-trade agreement from Canada
and Mexico that's not related tofentanyl at all.
So in that case, it was toobroad.
It was an abuse of theauthority.
So I think it's a really goodsign that the courts are
(03:20):
stepping up and saying, Hey,there are rules here that have
to be followed.
If you want to do tariffs, youhave to go through these
specific processes that.
Congress has granted thepresident to have in order to
impose tariffs.
But you can't just like decideone day to do 145% tariff on
China because of some, you know,nebulous economic emergency.
(03:42):
I.
Kyle Hulehan (03:42):
And so what effects do these, let's call
them willy-nilly tariffs, youknow, have, when you're kind of
just pushing a tariff out,pushing an idea out what happens
when he does this?
Erica York (03:53):
So there's two things.
One is uncertainty.
Um, and uncertainty itself actslike a tax on the economy.
If you're a business, if you'rea person trying to make a
decision and you don't know ifthat decision is going to face a
145% tax or a 10% tax, or maybeno tax, you're gonna wait.
Until you have some certaintybefore you make a big decision.
(04:13):
And whether that's hiring,whether that's starting a new
line of business, um, whetherthat's expanding the types of
products you offer, that's allgonna get held up.
Um, so investment stops justbecause of the uncertainty.
And then if the tariff actually.
Is in place, then that createsthis big tax burden.
You have higher costs if you'rea business.
(04:33):
If you're a consumer, you mightbe paying a higher price for
something and that reduces yourincome.
It reduces your incentives toinvest and work in the long
term.
Um, so you have both of thosechannels of negative effects.
And in our projections at TaxFoundation, we focus on that
second type of effect, theactual direct effect of the tax
on the economy, not the effectof uncertainty, because that's.
(04:55):
Really difficult to, to try totangle out.
But what we've found in ourestimates is that these
so-called I EPA tariffs, theEmergency economic powers,
tariffs, um, they drive aboutthree fourths of the long run
harm of all of the tariffs.
Um, the remaining tariffs arepretty narrow in scope compared
to the emergency tariffs, andthose remaining tariffs went
(05:17):
through the processes that thatCongress has delegated to the
president.
Um, so National Securityinvestigations, findings issued
public comment periods, thoseresulted in specific product
tariffs on steel, aluminumautos.
There are more investigationspending.
Um.
Those are relatively narrow inscope, and so they drive a
(05:40):
smaller amount of the economicharm that we project.
but right now there's like a$1.4trillion tax increase up in the
air depending on which way the,the court rules.
One of the big things we've seenthe Trump administration say in
the past few weeks especially,is that the revenues from these
tariffs are gonna help reducethe deficit.
They've talked about, you know,billions and billions of dollars
(06:03):
a day coming in.
Those numbers are too high, butwe have seen tariff payments.
Go up significantly because ofthis broad 10% tariff and these
other tariffs on Canada, China,and Mexico, especially if those
are taken off the table.
And if the government has torebate those tariff payments
potentially with interest, uh,that.
(06:25):
Just washes out this entireargument, and it points in favor
of what several people have beensaying.
The revenue from tariffs ishighly uncertain, not only
because of the bad economicimpact, but because of the shaky
legal ground that the tariffswere imposed on.
Um, and so lawmakers in Congressespecially should not count on
significant tariff revenuesbecause of this legal
(06:47):
uncertainty.
Kyle Hulehan (06:47):
That is a lot of money and I don't think anybody
wants prices to be higher, youknow, it was really nice for
like 14 hours to be liberatedfrom tariffs, actually.
But, you know, I'm justwondering, Erica, is there, is
there anything else about thisthat you want to hit on that you
need to let the people know?
Erica York (07:04):
Uh, I mean the, the arguments were really clear in,
in this ruling.
Um, and I think, you know, it'sa really strong chance, at least
I hope.
That the ruling gets upheld, um,that this was an abuse of
authority, that the presidentcannot just unilaterally impose
a huge sweeping tax on theAmerican economy.
(07:27):
You know, this is a$1.4 trilliontax hike over the next decade
that the president did.
By just like signing anexecutive order, um, that is so
far out of the bounds of whatCongress has delegated the
president to be able to do ontrade and tariffs.
And so it's, you know, it's agood sign that this has been
(07:49):
potentially stricken down.
Um, hopefully that stands andhopefully it means that American
taxpayers in the US economy.
Can avoid the worst of thesetariff hikes.
I don't think that means alltariff hikes are off the table.
I think if this channel is shutoff by the courts, we're likely
to see the Trump administrationuse these other channels.
(08:10):
Um, but those will have to gothrough like a regular process
and there will be a lot moretransparency associated with
that as opposed to this.
A tariff where Trump can just,you know, change the rate
depending on the day, dependingon the news.
Um, that's really bad for theeconomy if he is able to
continue doing that.
Kyle Hulehan (08:29):
Yeah, and I think it's nice to see that maybe the
division of Powers is, isworking here with our three
branches and we're getting alittle bit of movement.
On these things.
Um, Erica, thank you so much forbreaking this down for us.
I appreciate that so much.
Erica York (08:42):
Thanks, Kyle.
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