From Yahoo Finance, November 24:
The White House is quietly preparing a backup plan for President Trump's tariffs, as the US Supreme Court is set to decide whether he had the authority to issue them in the first place.
Bloomberg reports that the Commerce Department and the Office of the US Trade Representative have considered alternate plans in the event the court rules against the administration. The replacement plans, which may face their own legal challenges, are a sign the White House is getting ready behind the scenes for SCOTUS to rule against the tariffs, even as the president remains optimistic publicly.
The president invoked the International Emergency Economic Powers Act (IEEPA) to levy blanket tariffs on goods from other countries. But Congress is the branch of the US government with oversight of taxation and spending — not the president.
It's not clear when SCOTUS will make its ruling. But Counselor to the Treasury Secretary Joe Lavorgna told Yahoo Finance's Jennifer Schonberger earlier this month that undoing the tariffs would cause "unnecessary economic pain and hardship," damaging financial markets and confidence.
Meanwhile, Trump further expanded tariff breaks on Brazilian goods, part of moves to lower costs on some everyday goods as consumers grapple with price struggles. The move came a week after he signed a similar order more broadly reducing tariffs on goods including beef, tomatoes, coffee, and bananas....
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If interested see also September 1's "What Are Trump’s Options If His Tariffs Are Ruled Unlawful?"
Also relevant, March 21 - "Will Economic Detox Lead to a Recession? Maybe Not. But a Long Deep Stock Market Rout Will (See Dotcom Bust)":
If the Trump administration achieves its goal of cutting the projected deficit in half, and thus removing a trillion dollars in stimulus spending—all deficits are stimulus, whether you call them that or not—if they cut the deficit in half, a recession seems inevitable.
However, I'm not sure the media and other political posturing on the terror and ruin posed by recessions is even close to what actually happens across a population of 345 million people. This is not 1873 or 1893 or 1933, the safety nets are a bit stronger than they were in those retrograde economic eras.
A different analog that may be more instructive is the 18-month 1920 - 1921 recession, brutal for those unemployed but setting the stage for the 1920's boom in the economy and in the mass adoption of consumer technologies that 100 years later still shape society, telephones, appliances, automobiles, radio, Hollywood etc., etc.
So who knows?
The other, more important point is that the interest required to service the ever-increasing debt will destroy both the economy and the constitutional republic if the detox does not happen....
May 29's - Goldman Sachs: "Four tools at the Trump administration’s disposal after a U.S. court blocks tariffs"
September 2 - "Why the Supreme Court Could Uphold Trump’s Tariffs"
Paying particular attention to the dissenting opinion authored by Judge Taranto, beginning on page 62 of the Opinion.
September 9 - "Supreme Court agrees to decide the fate of Trump’s tariffs":
This could set up some ructions in the bond markets should the court decide against the administration. In the first place the Treasury Department will have to repay or otherwise credit the companies that paid the tariffs in question. That could amount to somewhere between $100 billion to $200 billion and just to make things extra-interesting the debit could be booked in the fiscal year that ends in three weeks.
Secondly, the lack of income from the tariffs would require the treasury to sell some $300 billion more debt than is needed if the tariffs stand.
There are a few options* for the administration under other tariff authorities but the day of the Supreme Court decision could be challenging for market participants....
November 4 - "Looking to experts for how the Supreme Court will rule on tariffs? They aren't sure either.":
It doesn't really matter how the Supremes rule, tariffs of one sort or another will be in place at the end of 2025 and the US, Mexico, Canada trade agreement will be renegotiated early next summer.
In the meantime our best guess is that the Court will rule against the Administration on at least one of the points being argued, the pundits will splash headlines about refunding the money already collected (I think it was $32 billion last month), the deficit will be calculated to grow, treasuries will get sold and I will be posting that "this isn't the real market whack" but the one before the real star-spangled, bubble-bursting, all-American market panic....
November 5 - Tariffs: Today's Supreme Court Oral Arguments
And quite a few more. The search blog box, upper left, is often rewarding.
