Will legal challenges end the trade war?

A US federal trade court has blocked most of president Trump's sweeping tariffs, but the Trump administration is appealing the decision. So how significant will this ruling prove to be, and what impact will it ultimately have on Trump's trade policies? I'm Alison Nathan, and this is Goldman Sachs exchanges. For today's episode, I'm speaking with my colleague, Alec Phillips, chief US political economist in Goldman Sachs research. Alec, welcome back to the program. Thanks. Thanks for making yourself available on such short notice. Sure. Another big development, it seems, as we sit here on Thursd

So what the court said and to be clear, this was a three judge panel on the Court of International Trade, which is like a district court, so it's the lower level court. What the panel said was that these tariffs are essentially so large and unlimited that it's hard to reconcile that with the idea that the administration has authority to impose tariffs like that given the what's called the nondelegation doctrine. Essentially, the idea that Congress has the power to impose tariffs. They can delegate certain powers to the administration, but only with intelligible limits. And since there was no l

So just to be completely clear, this court ruling relates to this emergency power authority that the president used to, impose these tariffs.

Yes. So there are many different authorities the president has to impose tariffs. This basically blocked one of those authorities in this particular case. It's not to say that there wouldn't be other powers or other instances where an emergency could lead to some tariffs. But in these particular cases, what this court found was that the emergencies cited did not justify the tariffs that were imposed, given the authority under this law, IIPA, which is a law from 1977. Let

me just quickly ask, did anyone see this coming? Because, I mean, this hit late Wednesday night, and it seemed to be a big surprise.

So I will say we were definitely highlighting this as a risk that was out there, and I think we knew that the ruling would be coming soon. And so, you know, that was that was clear. I think what was less clear was that the court would, number one, rule in this direction, and number two, actually rule on the merits of the case as opposed to just granting or denying an injunction. You know, one of the challenges with these cases on tariffs is that it's not, you know, it's not a life or death issue. And so it's there's a essentially, a higher bar to courts, granting an injunction when it's ultima

talk to us a little bit more about how the administration is responding and what that could look like and what the implications of that could be.

They can replace the existing 10% across the board tariff with some new tariff. And so they have authority under what's called section one twenty two of the Trade Act of 1974 to impose up to a 15% tariff, but only up to a hundred and fifty days. So it's a an explicitly temporary authority. It was actually, you know, ironically, granted to the president after president Nixon had used what essentially is the same authority that president Trump was relying on to impose a temporary tariff that also happened to be 10% in 1971 when The US was coming off of the gold standard. And so this is a pretty

is the key takeaway from all of this that this comes down to what authority the administration is using? And, ultimately, there are many that they can use. And so those who are looking at this court ruling as, you know, suggesting that these tariffs aren't going to take place should, you know, should be di