Monopoly Round-Up: Trump Mocked by Wall Street as the Boy Who Cried Tariff, Loses Trade Court RulingA trade court said Trump's use of tariffs is unlawful. Plus, we start to see what the Google remedy might be, and a major bill in Oregon banning corporate ownership of doctor's practices passed.Today’s monopoly round-up is a bit shorter than usual, as I’ve been on vacation for the past week. The biggest piece of news is that the Trump administration’s trade policy took a big hit. But in addition, there are updates on how the key judge overseeing Google’s antitrust loss sees the possibility of a break-up, the FTC waived through a a major chip software merger, and noncompete bans continue to advance in states. Ok, let’s start with Trump trade policy, which got rolled back in two ways. The first and more important way is that Wall Street’s nickname for President Trump’s trade policies, the ‘TACO trade’, finally got to Trump. TACO, coined by a Financial Times journalist, stands for Trump Always Chickens Out. It comes from the fact that the markets are reacting less and less to his tariff pronouncements, as traders notice he talks big and then retreats. They have stopped selling stock when he announces tariffs, confident that he’ll backtrack quickly. Trump was asked about the term by a reporter, and he reacted angrily instead of dismissively. “I’ve never heard that” term, he said, and then said it was the “nastiest question” he has heard in weeks. The clip is below. Trump can usually brush something off with mockery, that he didn’t do so this time shows the insult got to him. It’s not that Wall Street is special, everyone can see the dynamic, but it was finally put to Trump directly that rich people on Wall Street know that he is the boy who cried tariff, and that he doesn’t mean what he says. He found that insulting, as he should, but it’s also true. China has already tested him on this point and won; they still aren’t exporting rare earths to the U.S., even after promising to do so. It’s not that he’s completely faking it; tariffs are higher than they were before he took office, but everyone can see the biggest changes he regularly threatens just aren’t happening. The second setback was that the Court of International Trade (CIT), which is a special court set up to handle trade questions, ruled that Trump’s use of emergency authority to impose tariffs was unlawful. This ruling doesn’t affect all tariffs, as not all of his tariffs were done using emergency authority. (If you want the specifics of which tariffs would be affected, check out this Twitter thread by trade expert Lori Wallach. ) Also the ruling was stayed while it works up to the appeals court and possible the Supreme Court, so it won’t have immediate impact. But it’s still an important legal decision, and if it stands, it will make it a bit harder for Trump to act as he wishes on trade. Let’s go to the decision. The court ruled that the law undergirding those tariffs - the International Emergency Economic Powers Act (IEEPA) - did not authorize the two separate sets of tariffs Trump imposed using it. The legal rationale, according to my non-lawyer reading of the decision, involved both broad constitutional principles and a reading of the underlying statute. We’ll start with two separate theories of Constitution law. The first is called the “non-delegation doctrine.” That theory says that there must a meaningful separation of powers between the executive and legislative branches in the Constitution. As such, the legislative branch can’t just delegate its authority to the executive without some limiting principle. Delegating broad tariff-making authority to the President, which is a Congressional prerogative, falls under this theory. Additionally, there’s something called the “major questions doctrine,” which the Supreme Court recently adopted. According to that doctrine, when the President wants to do something major, the law he’s using has to be extra clear on his authority. These are both conservative principles fostered by a right-wing legal group called the Federalist Society. And now let’s go to the tariffs. The IEEPA law requires a declaration of emergency, but it has broad language on what the President can do if he declares such an emergency. Trump offered two sets of tariffs under IEEPA, the first being ostensibly about the “emergency” of stopping fentanyl. The court said that stopping fentanyl could be an emergency, but the use of the law had to be directly related to stopping that emergency. Raising tariffs was was just a thing he wanted to do, it was largely unrelated to stopping drug smuggling. As such, it violated the limiting principle in IEEPA, and became an unlawful delegation of legislative authority to the executive. The second set of tariffs were about dealing with the “emergency” of imbalanced trade. The court looked at the statutory language and said Congress did not allow broad trade imbalance of the kind cited by Trump to be considered an IEEPA emergency, but had to be addressed under a different trade law. That’s not the end of the story. The administration appealed, got a temporary stay, and this one looks like it’ll eventually go to the Supreme Court. The court is unpredictable, as its conservative majority is torn between loyalty to Trump and loyalty to Wall Street. And there are other forms of tariff-making authority that Trump can use. I believe he just used one of them to double steel tariffs. It must be said, at least some of these authorities are less arbitrary than IEEPA and require processes to investigate and uncover unfair trading practices or threats to national security, though the President still has wide discretion in this area. That said, there are a few conclusions from this week. The first is that Trump might need to find a new strategy on trade. His credibility has diminished, and his legal tools are blunted. So he’ll have to figure out a way to change the narrative, which he is very good at doing. The second is that many businesses will start to revert to a pre-trade war posture, as any attempt to re-shore now seems foolish. The specter of empty shelves seems more remote, though no one really knows, and there could be some significant aftershocks. Politically, this week threw a serious wrench into Trump’s plans. One of the most obvious things a new President can do in putting forward a policy is to get Congress on board. If Trump wanted to reorient America’s financial and trading order, he should have gone through the legislative branch, which is controlled by his own party. He didn’t, probably because he knew he couldn’t bring them along. Instead he relied on his own authority and what he thought were pliable judges. And now comes the political fallout. The court hearing his trade case was composed of a panel of three judges, but these were not a bunch of lefties; one of them was even appointed by Trump in 2019. Instead of accepting the decision, Trump raged against the hundreds of judges he put on the court in his first term, and called Leonard Leo, the longtime organizer of the Federalist Society and the architect of his first term’s judicial strategy, a “real ‘sleazebag.’” In other words, the conservative legal movement first put together in the 1960s by among others Robert Bork is being torn apart, both intellectually and now politically. And now, the rest of the round-up. It’s a bit shorter this time, since I was on vacation last week. But I still found lots of interesting stuff. On Friday, we started to hear what the Google search remedy might look like, noncompete legislation continues to advance, a shockingly great bill banning corporate ownership of doctor’s practices passed both houses in in Oregon, and the Trump Federal Trade Commission waved through a large chip software merger to the cheers of the antitrust defense bar. Read on past the paywall if you want the details. (And as usual, if you are a student, government employee, you got laid off, or otherwise can’t afford it, let me know and I’ll comp you a subscription. And if you can afford it, please do subscribe, I am putting your money to good use.)... Continue reading this post for free in the Substack app |