Trump's Tariffs Deemed Illegal - What Now?

0:00 Hey everyone, it's Richard.

0:00 You're watching the Plain Bagel, your number

0:02 one tariff news channel here with a big

0:05 update.

0:05 As you've probably heard, the US

0:06 Supreme Court has officially ruled that

0:08 Donald Trump's tariffs brought under the

0:10 International Emergency Economic Powers

0:12 Act, or AIPA for short, are illegal,

0:16 upholding a lower court ruling and

0:18 forcing the White House to lift all

0:19 previously imposed tariffs under this

0:22 law.

0:23 A pretty big update to the global

0:24 trade war timeline and one that was

0:26 celebrated by many online who saw this

0:28 as dealing a meaningful blow to Trump's

0:31 trade tariff agenda, effectively

0:32 unraveling what's been one of Trump's

0:35 favorite tools for international

0:36 relations and negotiations.

0:39 At least that was the case for a solid

0:41 couple of hours until the president came

0:43 out with a fiery press conference

0:44 highlighting that not only had the

0:46 Supreme Court failed in stopping its

0:47 tariffs, but he would actually be coming

0:49 back with even more tariffs, seemingly

0:51 in retaliation, I guess, uh, with the

0:54 president the same day as the ruling

0:56 announcing a new temporary 10% tariff

0:59 against most other countries and later

1:01 on Saturday announcing that this rate

1:02 would be increasing to 15%.

1:05 Albeit, as of the time of posting, we've only so

1:07 far seen the 10% tariff go into effect

1:10 on Tuesday, February 24th.

1:12 So, naturally, it all raises a number of

1:14 questions.

1:14 Who's impacted here?

1:15 What's the deal with these new tariffs?

1:17 And what's going to happen to the estimated

1:18 $175 billion of tariff revenue that's

1:22 already been collected that's now been

1:24 deemed illegal?

1:25 Well, that's what we'll

1:26 cover in today's video.

1:27 in addition to what laws the president might use in the

1:30 future to reintroduce tariffs and

1:32 increase levies further beyond the 10 or

1:34 15% we've seen so far.

1:36 And we'll start by going through the Supreme Court

1:38 ruling itself.

1:39 You can see that the case

1:40 is Learning Resources versus Trump,

1:42 President of the United States.

1:43 Learning Resources is actually an Illinois based

1:46 uh toy company that brought this case

1:47 against the White House, albeit the case

1:49 was actually combined with another

1:50 similar case brought by the liquor

1:52 company VOS Elections and 12 US states,

1:55 which is why you can see multiple

1:56 plaintiffs here.

1:57 And in the case, the

1:58 plaintiffs alleged and the Supreme Court

1:59 justices upheld that AIPA does not

2:02 authorize the president to impose

2:04 tariffs.

2:05 AIPA is a 1977 law that among

2:07 other things allows the president a

2:09 number of powers to restrict

2:11 transactions and trade in the presence

2:13 of a quote unusual and extraordinary

2:15 threat.

2:16 Essentially providing a way for

2:17 the president to bypass congressional

2:18 approval in the face of a threat to

2:21 national security.

2:22 However, the justices ruled 6 to3 with three conservative

2:25 justices dissenting that while the

2:27 president has the power to block imports

2:30 and exports under this law, the power to

2:32 explicitly tax is not covered by these

2:35 powers and rests solely with Congress as

2:38 outlined in the Constitution.

2:40 Something that was supported by president with no

2:42 president having ever previously imposed

2:45 tariffs under AIPA.

2:46 And the justices argued that Trump's tariffs violated the

2:49 major questions doctrine uh which

2:51 requires that actions by the

2:53 government's executive branch of

2:55 significant consequence be clearly

2:57 authorized by Congress rather than

2:59 through ambiguous language.

3:01 In other words, because AIPA doesn't explicitly

3:03 give Trump the power to tariff

3:04 countries, and because Trump has been

3:06 meaningfully leaning on this law,

3:07 handing out tariffs like Oprah Winfrey

3:10 with how he's been making sure everyone

3:11 gets one, these actions should require

3:13 congressional approval.

3:15 With the justices indicating, quote, "The

3:16 president must point to clear

3:18 congressional authorization to justify

3:20 his extraordinary assertion of that

3:22 power.

3:23 He cannot." Now, as for which

3:24 tariffs are impacted here, the justices

3:26 highlighted two main sets of levies.

3:29 The first being the fentanyl linked tariffs

3:31 Trump first announced early in his term

3:33 against China, Mexico, and Canada.

3:36 Specifically, the 10% tariff on Chinese

3:38 goods, 25% tariff on Mexican goods, and

3:40 the heightened 35% tariff on Canadian

3:42 goods.

3:43 And the second set are the more

3:44 broadly reaching country specific

3:46 reciprocal tariffs uh that Trump first

3:48 announced on April 2nd or the so-called

3:51 liberation day with this being inclusive

3:53 of the many updated tariffs that came

3:55 afterwards.

3:56 Meaning that any of the

3:57 countries that saw their names appear on

3:58 those bristle board posters and beyond

4:01 have now seen those tariffs effectively

4:03 erased.

4:04 Meaning that we finally seen

4:05 justice for the Herd and McDonald Island

4:08 penguins who have been wrongly targeted

4:10 by tariffs from the beginning.

4:12 Now, importantly, that does leave other

4:13 tariffs unaffected here.

4:15 Uh, we will continue to see the sectoral tariffs

4:17 brought under section 232 of the trade

4:19 expansion act of 1962, which if you

4:22 recall includes levies on most steel and

4:24 aluminum, auto parts, certain copper

4:26 products, soft wood and timber,

4:27 furniture, and semiconductor imports.

4:30 And these will continue to impact a lot

4:32 of countries.

4:33 You can see from this map

4:34 that even the sectoral tariffs alone

4:36 still capture a lot of America's global

4:38 trade partners.

4:39 However, according to Reuters, these other nonaipa tariffs

4:42 only made up about a third of the

4:44 revenue generated from Trump's tariffs

4:46 in the last quarter of 2025,

4:48 demonstrating that this ruling still

4:49 strikes down the lion's share of Trump's

4:52 tariffs with Pen Wharton budget model

4:54 economists estimating that AIPA tariffs

4:56 provided 175 billion in revenue for the

5:00 US government since their

5:02 implementation.

5:02 Which brings us to the

5:03 question, what happens to this collected

5:06 $175 billion now that the tariffs that

5:09 raised this amount were deemed illegal?

5:11 Well, there still remains a pretty big

5:12 question mark there.

5:13 While it's largely expected that this ruling will compel

5:15 the US government to refund these

5:18 illegally collected levies, the ruling,

5:20 as highlighted by the dissenting

5:21 opinion, says nothing about how the

5:24 government should go about doing so.

5:26 essentially leaving the issue to lower

5:28 courts like the US Court of

5:29 International Trade to decide, which

5:31 means that we're probably in for years

5:33 of further litigation before we see any

5:36 money returned here, with in fact Trump

5:38 and members of his administration

5:39 suggesting that they'll be fighting the

5:41 matter in court.

5:42 And of course, it's

5:43 very unlikely we see a fair repayment of

5:45 the tariffs here.

5:46 While Trump long maintained that it would be foreign

5:48 companies who would be paying

5:49 predominantly for these tariffs here and

5:51 there is some truth to these companies

5:53 covering some of the costs by lowering

5:55 their own prices.

5:56 That tone is obviously

5:57 going to change now that it's time to

5:59 pay the amounts back.

6:00 And while US consumers bore the brunt of tariff costs

6:03 via the passalong price hikes, any

6:05 refund we do see is likely to go

6:07 predominantly to importing companies to

6:09 whom the tariff fees were explicitly

6:11 charged when importing goods.

6:12 And even then, because getting a refund will

6:14 likely require some sort of application

6:16 or potentially even uh fighting the

6:18 matter in court, smaller companies who

6:19 don't have the resources for these

6:21 things are going to be pretty

6:22 disadvantaged when compared to larger

6:24 companies like FedEx, for example, who

6:26 just this week became the first large US

6:28 company to file a lawsuit following this

6:30 ruling for the reclamation of tariffs,

6:33 with a number of other companies,

6:34 including Costco, having also sued the

6:36 government prior to the judgment.

6:38 And while the idea of paying a dividend

6:39 tariff to a bunch of people has been

6:41 floated in the past, that would likely

6:42 require congressional approval and would

6:44 be unlikely to meet the requirements of

6:46 a reimbursement here.

6:47 But hey, while you

6:48 might not get a tariff refund here for

6:50 the higher prices you've been paying,

6:52 you can rest assured that at least the

6:54 large corporations are taken care of.

6:56 Now, in terms of the broader impact of

6:57 this ruling, there's obviously a mix of

6:59 factors here.

7:00 While the returning of

7:01 tariff funds could be a positive for the

7:03 economy, it does leave the government in

7:05 an awkward position with its budget.

7:07 Uh given that tariffs were a key offsetting

7:09 force to Trump's higher deficits under

7:11 the one big beautiful bill, the IPA

7:13 tariffs alone that have been collected

7:14 represent about 10% of the 2025 fiscal

7:17 budget deficit.

7:18 And obviously it's up in

7:19 the air how much tariff revenue will be

7:20 raised in the future.

7:21 And there's a pretty big impact on price levels.

7:23 The budget laba eel estimates that the

7:25 complete elimination of these tariffs

7:27 would reduce the average effective

7:29 tariff rate faced by consumers from

7:31 16.9% to 9.1% and cut the expected price

7:36 level inflation from tariffs in half

7:38 from 1.2% to 0.6%.

7:41 With the price impact

7:42 being even more significant when you

7:44 dive into specific product categories.

7:46 However, as mentioned, tariffs are

7:48 seemingly not going away and may in fact

7:50 uh increase as Trump has seemingly

7:52 alluded to with Trump quickly replacing

7:54 the illegal tariffs with a temporary 10%

7:56 across the board levy under section 122

8:00 of the Trade Act of 1974.

8:02 A section that permits the president to impose tariffs

8:04 of up to 15% for up to 150 days to

8:08 address large and serious balance of

8:10 payments deficits.

8:11 uh with that simply

8:12 meaning any circumstance where the

8:14 country is sending more money abroad

8:16 than it is receiving uh something that

8:18 doesn't require a formal investigation

8:20 but Trump could argue regardless uh

8:23 given the trade deficits the country

8:25 does face with the US buying more

8:26 imports than it exports now importantly

8:28 while the tariffs are being described as

8:30 a baseline tariff here the white house

8:32 did include a number of exemptions to

8:34 this new levy uh with this including

8:38 certain critical minerals and metals

8:40 energy and energy products s natural

8:42 resources and fertilizers that cannot be

8:44 produced efficiently in the US, certain

8:45 agricultural products, pharmaceuticals and pharmaceutical ingredients, certain

8:48 electronics, passenger and other

8:49 vehicles, certain aerospace products,

8:51 information materials, donations in a

8:53 company baggage, anything already

8:54 subject to the sectoral section 232

8:56 tariffs we mentioned earlier, and

8:58 finally any duty-free goods under the US

9:00 MCA agreement with Canada and Mexico or

9:03 textiles and apparel under the Dominican

9:06 Republic Central America free trade

9:08 agreement.

9:08 So, you can see that there

9:09 are some meaningful carveouts here.

9:10 Now for Canada specifically, the change in

9:12 tariffs we have seen is a bit less

9:14 important.

9:15 Even though the country is

9:16 seeing its general tariff rate fall from

9:18 35% to 10%.

9:20 The country was already

9:21 sending the vast majority of its

9:23 products tariff-free to the US under the

9:25 USMCA agreement.

9:26 And for everyone else,

9:27 as mentioned, the tariff is only

9:29 temporary with it requiring

9:31 congressional approval to be extended

9:33 beyond that first 150 days, which seems

9:36 very unlikely given that the House of

9:38 Representatives amid all of this has

9:40 already voted to cancel some of Trump's

9:42 tariffs, specifically around Canada.

9:44 And Congress faces upcoming midterm

9:46 elections in November, just a few months

9:48 after these tariffs expire.

9:49 So, with tariffs being fairly unpopular in the

9:51 US, that might not be something

9:53 politicians look to support.

9:54 But that brings us to what comes after this first

9:57 150 days.

9:58 And while some might have

9:59 their fingers crossed that it might be

10:00 the end of of global tariffs from the

10:02 United States, that does seem very

10:04 unlikely.

10:04 Uh there are many different

10:06 avenues through which Trump can reimpose

10:08 tariffs here.

10:08 The first of which, of

10:09 course, being those sectoral tariffs

10:11 that were already seen under section

10:12 232.

10:13 While these do require an

10:14 investigation by the Department of

10:16 Commerce to demonstrate the national

10:17 security risk, the president has now

10:19 bought himself 150 days to sort through

10:21 which sectors he wants to impact here.

10:23 And even beyond the sector tariffs,

10:25 there are a number of ways through which

10:26 Trump could impose further levies.

10:28 With in his response to the ruling, Trump

10:30 specifically highlighting three other

10:32 statutes with which he could impose

10:35 further tariffs.

10:36 The first two also come

10:37 from the trade act of 1974.

10:39 Uh the first being section 2011 which allows the US

10:41 to impose product specific tariffs when

10:43 increased imports are causing serious

10:45 injury or the threat thereof to domestic

10:48 producers and section 301 which allows

10:50 tariffs when trade deals are being

10:52 violated or a country is putting an

10:54 unjustifiable burden or restriction on

10:56 US commerce with both of these sections

10:58 requiring a formal investigation

11:00 something Trump actually announced for

11:01 the latter section along with his

11:03 announcement of the temporary 10%

11:06 tariffs.

11:06 Then there's section 338 of the

11:09 tariff act of 1930 whereby the president

11:11 can impose country specific tariffs of

11:13 up to 50% in cases where a country

11:16 unreasonably discriminates against US

11:18 trade.

11:19 A section that doesn't seemingly

11:20 require a formal review, but one that

11:22 would likely face legal challenges if

11:24 used in this sort of broad-based

11:26 approach given some of the unclear

11:28 details with the law.

11:29 So, while some may

11:30 have hoped that the Supreme Court ruling

11:32 finally signaled the end of Trump's

11:34 tariff tirade, to his point uh with his

11:37 rant after the ruling, there are many

11:40 other tools in Trump's arsenal for

11:42 keeping tariffs in place.

11:44 But that's not to say the update doesn't matter.

11:46 The ruling is still a pretty big blow to

11:48 Trump's tariff agenda and foreign

11:50 policy.

11:51 For one, while the president has

11:52 threatened higher tariffs here

11:54 currently, the ruling has reduced

11:56 tariffs pretty meaningfully for a number

11:58 of countries.

11:58 Uh, previously we saw most

11:59 countries facing at least 10% tariffs

12:02 with other countries facing AIPA tariffs

12:04 as high as 50%.

12:05 However, those rates have now all been replaced with a

12:08 baseline 10% across the board, which for

12:10 some countries like Brazil meaningfully

12:12 decreases the levy paid on their

12:14 exports.

12:15 It's also led to some

12:16 discontent from countries who have

12:18 already made trade deals with the US to

12:19 lower their trade tariffs.

12:21 Countries like the UK and the entirety of the

12:23 European Union have not so far been

12:25 granted any carve out in this new update

12:27 and seemingly now faced the same rate as

12:29 everyone else, including the potentially

12:31 higher 15% rate despite making

12:33 concessions around purchases, investments, and tariffs with the

12:36 European Union actually delaying its own

12:38 deal ratification as a result of this

12:41 uncertainty.

12:42 Now, US trade representatives have reassured countries

12:44 that the US will be sticking to its

12:46 previously negotiated deals.

12:48 But given Trump's track record of pulling 180s on

12:50 his own trade deals, we could see

12:53 countries discouraged in their

12:54 negotiations with Trump if there's

12:56 concerns that he might go full Darth

12:58 Vader and just start changing terms on

13:00 people.

13:01 I am altering the deal.

13:02 Pray I don't alter it any further.

13:04 But above all else, while Trump again does have other

13:06 tools in his arsenal, the ruling does

13:09 take away one of the president's

13:10 favorite big sticks here.

13:12 Uh, previously Trump had been pretty quick to either

13:15 threaten or impose tariffs under AIPA

13:18 for a slew of at times seemingly

13:21 unrelated or frivolous issues with Trump

13:24 imposing AIPA tariffs against Brazil

13:26 seemingly mostly because of the

13:27 country's prosecution of former

13:29 president Gier Bolsinaro in Switzerland

13:31 because in a phone call with their

13:33 former president, he quote didn't really

13:36 like the way she talked to us.

13:37 And of course, here in Canada, we've seen that

13:39 firsthand with the country being

13:40 threatened with a slew of tariffs for

13:42 everything from the country's planned

13:44 implementation of a digital services tax

13:47 to its airing of an anti-tariff ad that

13:49 relayed a direct quote of Ronald Reagan

13:51 on the negative impact tariffs have on

13:54 the economy.

13:54 But now, it's going to be

13:55 harder for the president to impose

13:56 tariffs on a whim like he's done in the

13:58 past, with any future tariffs likely to

14:00 require a more formal review.

14:02 So, while Trump can certainly threaten future

14:04 tariffs as leverage, something we've

14:06 already seen in the midst of this

14:08 decision with Trump warning countries

14:09 not to play games around the trade deals

14:11 and warning countries during his State

14:13 of the Union address to stick to their

14:15 negotiated deals if they didn't want to

14:17 face his renewed eye under different

14:19 tariff laws.

14:20 The ruling does mitigate

14:21 his ability to just bludgeon a country

14:24 with levies whenever they do, say, or

14:28 sound some way he doesn't like.

14:29 So, we'll have to wait and see how this

14:30 ultimately impacts the country's foreign

14:32 relations.

14:33 Uh whether we see countries

14:34 stick to the tone of their former and

14:36 ongoing negotiations or if we see more

14:39 push back and frustration amid the

14:41 changing circumstances within the US.

14:43 Trump could also use all this as an out

14:45 for the policy leading up to the coming

14:47 midterm elections.

14:48 But with the president once again sharing his vision

14:50 of replacing a substantial portion of

14:52 income taxes with tariffs during his

14:54 State of the Union address, we haven't

14:56 seen any indication that he'd be backing

14:58 away from this policy.

14:59 But again, we'll ultimately have to wait and see.

15:01 Thanks for watching.

15:01 I hope you found this

15:02 video helpful.

15:03 If you did, please do

15:03 make sure to like, subscribe, all that

15:05 good stuff.

15:05 It does help the channel

15:06 tremendously.

15:07 And let me know your

15:07 thoughts on the update from the Supreme

15:09 Court.

15:09 Are you happy with the ruling?

15:10 Do you view it as pointless and expensive

15:12 given the need to now reimburse tariffs

15:14 here?

15:15 Any and all thoughts, welcome down

15:16 below.

15:16 Thanks again for joining and as

15:18 always be safe out