Trump’s tariffs are not dead yet, with Michael Froman

Episode Summary

Executive Summary: The episode examines the fallout from the Supreme Court’s rejection of Trump’s IEPA tariffs and the administration’s rapid pivot to new tariff tools under Section 122. Guest Mike Froman argues refunds are legally due, consumer effects will be indirect, and the bigger story is continuing tariff volatility as Trump likely uses Sections 301 and 232, plus other authorities, to recreate a similar trade regime.

Main Topics: Supreme Court ruling on IEPA tariffs (Priority: 5/5): The discussion opens with the Court striking down tariffs imposed under the International Emergency Economic Powers Act and what that means legally and politically. Refunds and importer claims (Priority: 5/5): Froman says the legal basis for refunds is settled, but the administrative process may be messy because some tariffs were liquidated and others are still on deposit. Consumer and inflation effects (Priority: 4/5): The hosts discuss whether tariff refunds help consumers; Froman says they likely won’t get direct refunds, but the ruling may reduce future price increases. Section 122 tariffs and legal durability (Priority: 5/5): Trump’s new blanket tariffs are analyzed as a response to a balance-of-payments crisis rationale, with uncertainty about whether courts will defer to the executive. Impact on trade deals and retaliation (Priority: 4/5): The episode explores how new tariffs may conflict with arrangements involving the EU, UK, India, China, and others, while retaliation remains unlikely in the short run. Future use of Sections 301 and 232 (Priority: 5/5): Froman expects the administration to use trade investigations and national-security tariffs to rebuild a broader tariff architecture over the next 150 days. Limits of non-tariff tools (Priority: 3/5): The Supreme Court ruling may constrain Trump’s ability to use tariffs for non-trade political grievances, though embargoes and licensing could be explored under IEPA.

Key Arguments: Froman was only mildly surprised by the Supreme Court decision because the oral arguments and the legal framework pointed toward invalidation. Refunds of improperly collected tariffs are, in Froman’s view, legally due; the main uncertainty is procedural, especially for liquidated versus unliquidated entries. Consumers will not receive direct rebates, but tariff removal could reduce future price increases and ease inflation pressure. The new Section 122 tariffs may be harder to challenge because the U.S. trade deficit gives the administration a plausible external-imbalance argument. The administration is likely to use multiple trade authorities—especially Sections 301 and 232—to recreate or adjust tariff levels after Section 122 expires. The EU, UK, India, China, and others may seek to avoid escalation rather than retaliate immediately, because they still want negotiated outcomes with Trump. Trump may continue to push tariffs higher if politically advantageous, but pragmatism and affordability concerns could lead to exemptions and carve-outs. The Supreme Court’s limits on IEPA matter because tariffs were a flexible tool for political punishment beyond trade policy; other instruments are less clean or less revenue-generating.

Data Points: IEPA tariff revenue collected: over $130 billion - Estimated revenue taken from tariffs imposed since Liberation Day last April. Section 122 tariff rate: 10% - Trump’s initial announcement after the Supreme Court ruling and Friday press conference. Section 122 tariff rate later posted: 15% - Trump raised the rate in a Truth Social post the next day. Section 122 duration: 150 days - Temporary tariff authority expiring in late July. Section 122 end date: July 24 - The date mentioned for when the temporary tariff authority runs out. Customs liquidation period: about 351 days - Time customs can hold tariff deposits before liquidation, as described in the refund discussion. Petition window after liquidation: 180 days - Period importers may have to file a petition after tariffs are liquidated. Timestamp of recording: 8 p.m. GMT, Sunday, February 22nd - The host notes this to contextualize rapidly changing Trump administration announcements. Unexpectedness of Supreme Court ruling: 2/10 - Froman’s answer when asked how surprised he was by the ruling. Tariff cuts for China and India: 6–7 percentage points - Cited as average tariff-rate reductions according to Global Trade Alert.

Pivotal Quotes: "The precedent is well established that if tariffs or taxes have been collected by mistake, inaccurately, they are to be refunded." — Mike Froman: Explaining why he thinks the $130 billion in IEPA tariff revenue should be returned to importers. "I think we're still very much in an era of uncertainty" — Mike Froman: Describing the transitional period after the Supreme Court ruling and the new Section 122 tariffs. "He still has a lot of other tools at his disposal." — Mike Froman: On the likelihood that Trump will keep finding ways to raise trade barriers despite the Court’s ruling.

Implications: Trade policy remains highly unstable: importers may seek refunds, but new tariffs and investigations could replace the old ones quickly. Businesses should expect continuing volatility, selective exemptions, and shifting legal bases for tariffs.