Trump Tariffs 2.0

Episode transcript:

Note: This transcript is generated from a recorded conversation and may contain errors or omissions. It has been edited for clarity but may not fully capture the original intent or context. For accurate interpretation, please refer to the original audio. 

JOHN QUINN: John Quinn here. This is Law, disrupted, and today we’re having a second conversation with Professor Mark Wu, the Henry L. Stimson Professor at Harvard Law School. He spoke to us a few months ago before the decision in the United States Supreme Court about what was going on in the world of tariffs and what might happen in the court and what the issues were and what the alternatives were as seen at that time.

A lot has happened since then, we’ve now had a ruling from the United States Supreme Court that the legislation the president relied on to impose those new world tariffs or whatever he called them, what did he call ’em? I can’t remember now, how soon we forget.

MARK WU: It was Liberation Day, John.

JOHN QUINN: Liberation Day.

Exactly. So Liberation Day is very much in the rear view mirror now. And so we wanted to talk with Professor Wu about where we are now. We’ve now had a decision that the authority he relied on was wrong. He couldn’t rely on that. He couldn’t do what he did based on that legislation.

I think Professor Wu at the time we last spoke to him, expressed some skepticism about that authority turned out to be right about that. Since then, the president has announced that he’s gonna impose new tariffs. It was 10% and then maybe 15%. We’ve had a ruling from the International Court of Trade in New York that tariffs need to be refunded.

The government said, well, we can’t do it immediately. We don’t have the money but I know a lot of folks who paid tariffs are submitting applications for refund, including many of our clients. But Professor Wu, where are we now? What is it a straightforward path now? What tariffs are in effect?

What options does the president have? And what are the prospects for, you know, these refunds of tariffs?

MARK WU: Great. Well, thanks again for having me back on John. And, you know, let’s just do a quick recap for any of the listeners who may not have followed this as closely, although this has been so much in the news. I don’t know how you could miss the tariffs, but basically President Trump campaigned saying that he felt there was a need to enact stronger, higher tariffs against many countries that were taking advantage of the United States on trade. And so he did so under a number of different authorities, specifically a number of them being executive orders. Two of them were challenged at this case that went all the way up to the Supreme Court, this case Learning Resources Incorporated v Trump.

One of those was a series of what he called reciprocal tariffs. Tariffs to basically put the US back on level playing field calculated on basis of those countries, trade surpluses with the USA, second being a set of tariffs against Canada, Mexico, and China specifically that dealt with drug trafficking practices.

Both of those were under this IEEPA authority that you alluded to, the International Emergency Economic Powers Act. And it was those two specific set of tariffs that were deemed unauthorized. And so those have now come off, but again, there’s a whole set of other tariffs that, some of which go all the way back to, say, the first Trump administration, which continued to be in place, including a series of section 2 32, section 3 0 1 tariffs and so forth.

And as you’ve alluded to, even for the ones that came off, the president very quickly, four days after the decision came down, reenacted a set of tariffs under authority of what is called Section 1 22, which gives them the ability to impose tariffs up to 15% for up to 150 days if there’s a balance of payments crisis.

And so those are in place. Those have been challenged in the courts. We can talk about those a little bit more, but in short, you’ve got all of the other tariffs which weren’t challenged in this lawsuit. Those continue to be in place. You’ve got these new section 1 22 tariffs that have come on, and then the president has also started a whole new set of investigations to possibly put on new tariffs through other authority.

And that’s exactly what Section 1 22 was designed to do. So this is all still very much a moving set of full post in terms of what firms face when it comes to tariffs. And then, you know, we haven’t gotten even into the question of what about the ones that are already paid? How do those get refunded and so forth.

So a lot to cover here and happy to dive into this, whichever direction you wanna go in.

JOHN QUINN: Okay, so these, I think the major playing field, at least to my knowledge at this point, are these section 1 22 tariffs that the president posed four days after the decision. And you alluded to the fact that he has the ability to do that for only 150 days. And then I gather Congress must take some action if they’re to stay in effect.

MARK WU: Yes, there’s a couple things that can happen, right? So Congress can take action to continue to prolong those for whatever duration Congress might like. But the point of those 150 days is to allow the President to use other authority to conduct and possibly conclude investigations about unfair trade practices, which might be leading to this balance of payments crisis or emergency.

And so that’s what that 150 days is meant to do. And of course, president Trump did begin soon after he imposed the Section 1 22 Tariffs, a series of those investigations. So, you know, there’s a set of investigations right now against16 countries for practices which are leading to excess capacity.

Those began in March. We’ll see when those conclude. And then there’s another set which are against an even larger set of countries about their forced labor practices. And again, that could lead to a set of tariffs as well. And then there’s, a whole set of additional challenges which could come about as well through these national security investigations, which are still ongoing as well.

JOHN QUINN: I take it, the national security, tariffs, that’s a whole different separate category, there’s separate considerations that apply to those.

MARK WU: Yes, and those, you know, have been challenged before, including some of the ones that came up in the first Trump administration and those, you know, by and large, have stood up to much of the core challenges, but just to give you some examples of some of those that exist, right, that, you know, began under the Trump administration. There’s ones on critical minerals, there’s ones on commercial aircraft and jet engines, ones on polysilicon and, you know, solar panels, drones, wind turbines, medical equipment, robotics, and so forth.

JOHN QUINN: So, the president set these investigations in motion. And if as a result of those investigations, the executive branch determines, yes, in fact there’s forced labor, yes, in fact there’s unfair trade practices, yes, in fact, there’s national security issues here, does that then still require some congressional approval or some congressional action before the tariffs can continue past 150 days?

Or if he makes those determination? Is there no role for congress?

MARK WU: So those are not subject to that 150 days tariff, right? 150 days. You could think of it as there’s 150 days to allow the president to do these other types of investigations, to figure out what types of practices can be put into place once those investigations are concluded, right? Those recommendations go to the president and it’s up to the president then to take those types of actions.

Congress ultimately right through its power under Article one, section eight, it has the power to lay and collect taxes and duties, and so forth. So Congress could eventually overrule the president on these, but they’re not subject to presidential rule approval. Both section 3 0 1 as well as section 2 32 are considered to be delegated authorities where Congress has delegated this to the president to investigate either unfair trade practices or national security threats, for which tariffs or other types of actions might be justified.

JOHN QUINN: So as to those, if the President’s investigation yields a result that yes, there is, the administration determines there’s a basis for those tariffs. Then there isn’t another role for Congress unless Congress decides to enact, to take some action, some legislative action to change the course.

MARK WU: Exactly, and you’ll recall this is the same type of authority that President Trump used in his first term. So the steel and aluminium tariffs came about through the section 2 32 tariffs. Those were challenged in the courts, but those stood the challenge right? And then the China tariffs came about through the section 3 0 1 tariffs.

Those came about in investigation looking at China’s practices with intellectual property rights. And many of those tariffs continue to be in place today. They were continuing Biden administration, and they continue now. So, again, on any of these, Congress could decide to act differently, but often times Congress does not.

And so these become means by which presidents have enacted tariff policy. They require a lot more in terms of both procedural investigations as well as reports that lay out the substantive case. So they take a lot more time than the IEEPA pathway that President Trump chose to use in his second term.

But now that the courts have found he can’t do that, he’s going back to some of these other traditional pathways that he had used in his first term. And in essence, he’ll be able to not create the entire tariff policy that he had under IEEPA, but he’ll be able to do that with many of the key trading partners through these types of investigations.

JOHN QUINN: And presumably the results of these investigations can then be challenged administratively.

MARK WU: Yes. That is the case. And also as you and many of your listeners know, right, sort of, the standard, it looks a little bit different now than it did in the first term in a post-Chevron world. Right?

JOHN QUINN: So, is there some category of tariffs, which just by their nature under Section 1 22 or otherwise are going to expire unless Congress takes action.

MARK WU: Yeah, there are some. So if you look at the ongoing investigations, if you are importing from a country that isn’t listed in any of those investigations, or you’re importing a product that doesn’t fall under these types of investigations, right, those will expire on, you know, July 24th, unless Congress takes some type of action.

So, you know, if you’re talking about you’re importing something, that’s not of high national security value that doesn’t come from one of these countries that’s accused of, you know, engaging in unfair labor practices or other types of practices leading to excess capacity, right? Those will go back down to whatever the standard most favored nation tariff rate that apply come into place.

And then also even with the section 1 22 tariffs, there were some exemptions and carve outs put in place for several of the US free trade partners. And that’s part of what these attorney generals who are challenging that are alleging, is not in line with the statutory authority.

So there are already these carve outs and exemptions that exist today there. And so if you have been subject to EPO tariffs, but you now fall into one of these carve outs and exemptions, you know, you are in a much better position than you were before late February.

JOHN QUINN: All right, so we’ve gone from a situation where there are these sweeping across the board tariffs, covering all products, all countries under IEEPA to a situation now where very much it’s very much a you know, piecemeal or you have to look at a country by country, sort of product by product, what the fate of these tariffs will be.

MARK WU: Exactly.

JOHN QUINN: Right. So he initially announced that there would be a 10% tariff, under section 1 22 covering many, many countries, many products. And then he said something about he’s looking at raising them to 15%, which I gather under section 1 22 he could do at least temporarily. Where do we stand on that now?

MARK WU: That’s right. I think, he said, he may raise them up to 15%. He’s allowed to do so under the statute, but as far as I can tell, he has yet to act on that threat. So that is a threat. That’s something that he continues to wield, but it hasn’t actually fallen down yet as far as I can have any idea.

JOHN QUINN: I mean, that shows what some might say is uncharacteristic, you know, deliberation on our president’s part. Any idea why he didn’t go straight to the 15%, which was the max, he theoretically could do?

MARK WU: I’m not privy to those conversations, so I don’t know, right? It does leave a little room for negotiations. We know the president likes to leave himself some room sometimes, but also, you know, if you were looking at all this, really the focus is on the other investigations that are ongoing, right?

These section 2 32, section 3 0 1 tariffs, ’cause those are gonna be the ones where those tariffs are gonna be in place for some time to come. And those may be for much more than the additional 5%. So if I had a limited set of resources, that’s probably where I would be. You know, spending my brain power and my manpower to try to figure out what’s the right level there as opposed to, right, thinking about do I go up another 2%, 3%, 5%, or so forth?

JOHN QUINN: Right. You know, before the Supreme Court decision, so many countries negotiated trade deals with the US where they made these promises to invest very large sums of money in the US as part of broker doing the deal, making, doing the deal with the president, and the tariffs were part of that, the investments were part of that.

I’ve been very surprised that I haven’t seen any country saying, wait a second, we entered this deal based upon, you know, your, your this leverage that you had, that you, you threatened us with these tariffs. It turned out you couldn’t do that, that was a basis for the deal. We don’t see a need to follow through with the deal that we cut with the administration in terms of investments, et cetera, we wanna renegotiate all of that. But so far as I know, no country has done that.

MARK WU: Yeah. And you know, there, it’s an interesting point that you raised, right? So I think there’s a couple of different reasons why the, probably first and foremost; many of those countries that have cut those deals are subject to these other investigations, right? So even though the old authority doesn’t hold true, they’re looking at it to say, there’s likely to be some new tariffs that come down, through, say for example, the section 3 0 1 on looking at investigations relating to structural access capacity in production. Right. And so, if you’re the European Union, if you’re South Korea, if you’re Taiwan, Japan and so forth, they’re all a part of that set of 16 countries that are being investigated and expecting some new tariffs to come on.

As a result of all that, so, you know, they’re saying, you know, let’s wait to see what comes down there and that buys them some ceiling, right? In terms of making sure that if they were to scrap the deal, now they might be hit with something worse and then they find themselves back at the negotiating table.

JOHN QUINN: Why poke the bear, you know, at this point.

MARK WU: Right, exactly. And then the other thing I was gonna allude to is, you know, you also have a number of countries for which trade is just one of several foreign policy considerations with the United States. And we know how the president reacts when poked, so, if they’re thinking about defense security, again here, you know, why draw attention to yourself here, let’s just keep those deals in place, let’s see what happens as a result of these, section 3 0 1 or section 2 32 investigations, and then we can revisit. Of course, you know, this is a tough stance domestically for some of these back home, but you look at somebody like say Prime Minister Takaichi, who just had an election in Japan.

During the course of all of this, if you’re enormously popular on other fronts, right, this is not likely to surface at something, and it’s viewed as you’re being able to effectively manage a very tricky foreign policy situation with the United States.

JOHN QUINN: Well, it sounds like the tariff controversies are gonna be with us for a while now as these investigations go forward and predictably challenges to the different determinations. What’s happening with the state actions, some of the states have sued the government over tariffs.

Where does that stand?

MARK WU: Yeah. So, 24, so close to half of the state attorney generals have challenged these section 1 22 tariffs, right? And as I mentioned, they filed suit really with two key arguments. One is this section 1 22 statute, designed to deal with balance of payments crises, but in a very different world when it comes to overall fiscal, sorry, international financial systems and monetary policy than the one that exists today. That was a world where there was much more of sort of fixed exchange rates and balance of payments dealing with sort of reserves and so forth. We’re in a very different world today.

So they argue that looking at deficits as the means by which to measure that that’s not actually correct. And then the other thing is they argue also with regards to how that’s being implemented, the statute says it should not be done in a discriminatory manner. And as I alluded to earlier, there are a number of different carve outs and exemptions, particularly to fruit tray partners in the Western Hemisphere.

And so they’re also arguing that doesn’t comport with the language of the statute itself. But again, you know, it’s interesting on this because all of this will expire in a few months. So in the courts, what they’re really hoping for is something to possibly stall this or forestall Congress wanting to extend all that.

But as I alluded to, really the tariff policy that’s gonna come in place is gonna come through the section 2 32 or section 3 0 1 tariffs. And those have withstood challenges at least previously, so long as the administration is meeting all the procedural requirements, conducting the right types of investigations, building up the fact base in its report.

And so whether it does so this time around compared to say in the first term, we’ll see, but that’s really where this is all gonna play out, and we, it’s too early to say whether those will be subject to legal challenges because those reports and those tariffs haven’t come down yet.

JOHN QUINN: Right. I mean, what are the state’s beef and how do the states have standing to challenge the federal government’s tariff policy?

MARK WU: Do you mind rephrasing the question? I’m not sure I’m understanding the question there.

JOHN QUINN: Well, standing night might not be the exact word. What is the beef of the state? What’s the nature of their claim? Objection to the federal government’s policy. How are the states saying that they were injured?

MARK WU: So I think this is ultimately a federalism question, right? Under the understanding between authority between the states and the federal government states have agreed to delegate this, sorry, let me start all over again. So I just ultimately this is a federalism question.

Under our constitutional design, states have agreed to allow the federal government to set foreign commerce policy, including tariffs through the Constitution. But in deciding to allow the federal government to do so, they decided to allow Congress to do so. And so if they think that Congress has delegated this in a way that doesn’t comport with the language of their understanding there in terms of what the Federal Government’s authority is, they can then challenge that and, you know, they, here they really are arguing that the way this is being administered is actually a violation of the delegation itself, the delegation authority, and the executive branch is overstepping that, or is other prior.

They’ve even argued that it violates the overall separation of powers principle as understood in this compact that they signed through the Constitution.

JOHN QUINN: I mean, it’s, it still seems surprising to me that, I mean obviously trade, international trade tariffs that policy is something that’s in the province of the federal government. I mean, the states are challenging this. Why are they challenging it? What is it? Is there some harm to the states that they think that’s resulting from this, that gives them, is the basis for their objection?

I mean, I understand the point about, okay, you, it’s an unfair delegation. There’s constitutional issues here, but why are the states raising this?

MARK WU: Ultimately, it’s in my opinion or my assessment right now, a lot of this is political, right? So you look at which of those states that are challenging it, how many of those states have Democratic Attorney Generals but also at the end of the day, you know, some of the leaders of these states, have exporters who are putting pressure, on them to loosen up these types of policies.

So it’s a calculation states are making in terms of how much are there exporters being hurt versus how much might they expect to attract in new investments or new jobs or continue job losses from other firms that are being challenged by imports. But at the end of the day, you go back to the original understanding.

Back in the day, states did set tariffs against other foreign imports and including possibly even imports from other states, right. And our constitutional design was such to eliminate those internal tariffs and also to set a common tariff policy. And so in giving up those powers, states are understanding to say we gave those up with a certain understanding of what the federal government will do and the federal government isn’t behaving according to those rules.

We have every right to challenge that. But you know, to answer your question, I think right now, if you look at it, some of this is about dealing a political blow to the president.

JOHN QUINN: It’s a political bow, but presumably they are, they’re articulating a theory that this is impacting us in our state. This is bad for business in our state, and that’s the basis for challenging it.

MARK WU: Yep. And it must be popular with some of their constituents, right.

JOHN QUINN: Right. So let’s talk a little bit about refunds. From what I read, it sounds like, you know, these are lay down cases for refunds. Like you’re entitled to the refund. The International Trade Court in New York, as a matter of course, you know, ordering the refunds be made, that’s business as usual.

They do that a lot. Not on the scale of $655 billion, which I think is about what we’re talking about here. Are there any defenses to those claims for refunds, and if so, what are they?

MARK WU: You know, it’s interesting because, as you alluded to, there have been many of these types of refunds, but usually they’re for much smaller scale trade cases, right? We’re talking about a particular set of products maybe coming in from a particular country, and those, being taxed incorrectly or they were assigned to the wrong tariff line or something like that.

So it’s quite possible to do, also many of these payments are made on an electronic platform, so it’s also quite possible to go back and reverse those and so forth. The question is just, this is on such a large scale, and that was one of the arguments that the government has made. But here, like you alluded to, it is possible to undo. And so, I have a hard time seeing why they wouldn’t be undone.

But what the court’s role here is to do is to find a process that’s fair to all to do so, and to try to find a way to do so in an expeditious manner. So that’s really what we see playing out here in the court of international trade.

And to the surprise of some, including myself, that seems to be moving along a little faster than what one might have thought given the scale of what we have to undo here. But again, this is just undoing one set. But as I highlight to you earlier, I’m just also previewing there’s a new set to come, right?

So this set might get refunded, but you’re gonna be hit with another set of tariffs. And you know, you’ve got a lot of people who are trading right now who are really trying to just figure out, I wanna get my shipments in at the right time before those other new set of tariffs hit.

JOHN QUINN: Well, I mean, is this essentially right that there really isn’t a defense to one of these refund claims that the government can assert?

MARK WU: No, I think the questions really become right. There’s different categories of where you stand right now whether or not the process of what’s known as liquidation, this is when customs and border protection actually formulate, computes the amount of duties and fees and taxes that you’re owed.

And so obviously if that process hasn’t been completed, it’s a much easier cleaner case, right, to sort of say, well then, you know, if you haven’t computed it yet, don’t compute it. If you have computed it, but you haven’t finalized it yet, go back and redo the computation, right? So as you highlighted there, those seem really straightforward.

And that’s the first set that Judge Eaton, who was the judge on the US court of an extra trade who was assigned these cases, dealt with first. But then he very quickly said, even for the set that finalized, right? You already computed it and you may have even gone ahead and charged this and so forth, even for that set right, we have the records, you can go back and recalculate those and then you can wind up refunding those as well.

And so that’s the second order that came down, just a few days ago on March 27th, and, you know, it said, you know, even for those, the refund does apply. And of course, the government could challenge us, this is a lower, this is a ruling from a lower court, right? It could challenge us both on substantive as well as procedural grounds, but as you highlighted, you know, it’s, unless you think the judge behaved or overstepped their authority or they’re doing this in some way that’s not fair and so forth, right? The ruling from the Supreme Court is these tariffs don’t hold up. Now we’re just talking about the process by which we undo these. So I’m not sure if these are going to continue to be challenged all the way up.

Of course, the president threatened to do so and you know, he has quite a bit of time to file an appeal since these orders just came down. So if those appeals are filed, then you know, that could stay these orders, so we’ll see. But right now the lower court, is basically ruling in the way we probably would expect, but probably doing so at a faster pace than we might have expected.

JOHN QUINN: I think the president gave some indication that, if this process can be slowed down, he will intend to see that it slowed down, that nothing happens fast here.

MARK WU: Yeah, so we’ll see. Right? They’re still perfectly within the range of when they can file an appeal on these cases. And once they file an appeal, they could also ask to stay the order. And some of these are to set up a certain system and that still falls on CBP to set up those systems. And those are executive agencies that the president has control authority over.

So, you know, it’s one question to say whether legally they will prevail, but if you’re, someone who’s paid these tariffs and you’re asking, when am I finally going to get these back, that’s still a very different question.

MARK WU: Determined. Yeah.

JOHN QUINN: Yeah. I just wanna give a shout out to a team at our firm, headed up by Dennis Hranitzky, that’s helping a lot of our clients, getting advice and helping them process refund claims, suppose, a hundred percent of the tariff was passed on to customers. So I mean, the party that paid the tariff, it really was out nothing, they got paid in full. They got paid at higher prices, which had the tariff embedded in it. Can they still make a refund claim?

MARK WU: Those are some of the questions, right, that the government asserted, right? That, you know, but in the past, the question is simply over the administrative action that was taken and whether or not the administrative action was legal, right? So the question is not over the private action about whether or not the importer then passed those on to the consumer.

So in the past, those factors have not come into play, right? We’re just looking at the legality of the administrative action. And so, in those types of instances, the importer does get the refund. And whether or not they then wanna cut a check back to the people who bought from them or pocket that for themselves, that’s up to them.

But again, here we’ve got a president with a very loud bully pulpit who hasn’t hesitated to make use of that. So we’ll see. Right? Both, whether or not. That slows down the pace of the refund or if the refunds are eventually ordered, whether they’ll look to name and shame certain people. And you know, the part of this will also depend on what’s happening with inflation.

We’ve got other pressures out there as well that may be putting some pressures on that front on prices. And here, you know, you’ve got a possibility of certain bogeymen that you can set out if those refunds eventually do come down. John, I think you’re fading out on my end again.

JOHN QUINN: Two, 3:00 AM.

MARK WU: Yep.

JOHN QUINN: Professor Wu, I think I’ve seen claims by domestic customers against sellers or, you know, the exporters saying, you know, you charged me a price, which included these tariffs. The tariffs were now, we now know legally inappropriate. You owe me this money.

MARK WU: So that’s a different case, right? That’s a contract claim.

JOHN QUINN: Yeah.

MARK WU: You know, we’ll see how those come down. It depends on the exact terms of those contracts and is understood. But oftentimes, once that contract’s been signed, it’s an understanding that if you feel agreed, you need to go through the administrative process.

But it turns on the wording of each specific contract, right? If there were contingencies that were laid out in that contract, then of course those need to be honored.

JOHN QUINN: I mean, does a domestic purchaser in that situation have any relief in the international court of trade? Can they pursue a claim?

MARK WU: No, the cases in the court of international trade right, are predominantly cases that are taken against the government for administrative actions, right? So this is if you’re being charged the wrong tariff, if the government has classified your imported good under the wrong tariff line. If you believe right that a trade remedies action was not done in line with the authority through which that’s done, but these other claims, they would be subject to whatever is provided for in the contract itself.

And so again, right? It’s a difference over did the government air or did the other party not honor the contract?

JOHN QUINN: Right. Fascinating. I, is there anything else that we haven’t covered that, big picture? I know there’s a lot of details here and a lot of times the devil’s in the details, but is there anything else that our listeners should be thinking about or should know about this new tariff landscape?

MARK WU: No, I mean, the only thing that I will highlight to your listeners is that obviously one of the big pillars here is what happens with the US China trade. And there we have an uneasy truce between the two sides. And we have an upcoming presidential visit to Beijing, where we’ll see if that truce gets extended or not.

And then the other thing is we did have this large WTO ministerial meeting last month where basically, there weren’t any major new developments, except, you know, if folks are concerned with some of the digital trade e-commerce in those elements. And again, like I highlighted here, right, those continue to be impacted by some of the actions taken by the Trump administration, so forth.

So, you know, we tend to think of learning resources as dealing with all the Trump tariffs, but it really depends on which category tariffs, what type of actions that were coming into play. And it’s again, just the complicated set of moving pieces for which, you know, there’s still a lot more of the drama to be played out.

JOHN QUINN: Professor Wu thank you very much for bringing some clarity to this very complicated and rapidly changing situation. Thank you very much. This is John Quinn, and at Law, disrupted, we’ve been speaking with Professor Wu, a professor of international trade at the Harvard Law School.

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Published: Apr 20 2026