Trump Looking for Other Ways to Maintain Positive Impacts From Tariff Policy: Economist

Joining us now to discuss the Supreme Court's ruling on Trump's tariffs is Michael Bussler, economist, public policy analyst, and professor of finance at Stockton University. Michael, thank you for joining us. Good afternoon to you. To start off, your reaction to this ruling? So I talked with two different legal scholars, and they said from just a law standpoint, the Supreme Court's decision was correct. Under this IEPA, the president has the authority to regulate international trade, but it doesn't specifically mention tariffs. So the law scholar said to me he believes that the Supreme Court decision was correct. Now, looking at it, not just from a legal standpoint, but from the impact of what the tariffs have had on the economy and on national security, this is a little bit of a blow. The president says he's able to use some other laws. And I think about an hour ago, he said he's going to put a 10% tariff on everybody. So there are other things he can do. But the ability to use tariffs, remember Trump ended a lot of wars by threatening a tariff. You have a country that depends largely on selling some of their goods and services into the U.S. And Trump said, look, they're in a war with somebody. And Trump said, look, if you don't get this war over quickly, I'm going to put a tariff on, you won't be able to sell anything in the U.S. So the threat of doing that enabled him to end, I think, seven or eight different wars. So from a national security standpoint, it is a bit of a negative blow. But again, President Trump says he has ways to work around it. Okay. And you bring up the 10% global tariffs that President Trump announced earlier today. I actually brought a clip of that. I'm wondering if we can just take a quick look at that. Today, I will sign an order to impose a 10% global tariff under Section 122 over and above our normal tariffs already being charged. And we're also initiating several Section 301 and other investigations to protect our country from unfair trading practices of other countries and companies. So, Michael, can you just give us your analysis of President Trump's statements just now? Yeah. So, look, the big picture here, when President Trump came into office, he took a look at every trade agreement that the U.S. had with virtually every other country. Every single one of them was lopsided in the favor of our trading partner and to the detriment of the U.S., for instance. And this was started really after World War II. The U.S. wanted to help other countries develop. So I said, look, you can sell your goods in the U.S., we'll charge you only a token 2.5% tariff, which we did for decades. The other countries, though, they said, look, well, I'm glad we can sell in the U.S. We want to protect our infant industries from competition. So we're putting huge tariffs on U.S. goods coming into our country. Some of these tariffs were 20, 30, 50%. I think India had 100% tariff on things like motorcycles. Well, Trump said, look, that's causing a tremendously negative balance of trade. Last year, even with the tariffs, the balance of trade was a negative $900 billion, nearly a trillion dollars. Trump wants to fix that. The only way to fix that is to restrict imports coming into the country. And you do that by putting a tariff. And every one of these trade agreements that he negotiated, the other country, the trading partner has agreed to little or no tariff on U.S. goods. So U.S. will be able to sell our products, particularly agricultural products, really all over the world. So the intention of this was very good. According to the Supreme Court, the way he did it using this IEPA law was incorrect. He's going to try to do some other things. Okay. And President Trump earlier today also talked about manufacturing. I brought another clip here. Let's take a look at it. We lost 50% of our car business. We used to make cars. We made all the cars. And then Mexico came, Canada came, Japan and Germany. But they're all coming back now. How will this set back plans and progress made to restore U.S. manufacturing? So it definitely isn't going to help. Now, some of these foreign companies have already started to build in the U.S. Trump's idea was, look, I'm going to put a 25% tariff on cars that are made outside and even parts that are made outside the U.S. and brought into this country. If that happened, the foreign countries wouldn't be able to sell their goods. So they said, well, the only way to beat the tariff, let's come to the U.S. We'll make the products here, avoid the tariff. That will improve our manufacturing base, should add a large number of jobs and restore the manufacturing that we've lost over the last 40 or 50 years. So it's important that we bring that manufacturing base back. I don't know what's going to happen now. Some of these countries have signed agreements. I don't know if they're going to say we want to renegotiate the agreements or not. Some of that remains to be seen. And of course, the last big problem is what do you do with all the money you've already collected from tariffs? So what do you think? Does the Trump administration have to refund those tariff revenues they collected? The Supreme Court decision didn't mention that. The dissension, Justice Kavanaugh said, look, there's literally hundreds of billions of dollars. How are we going to figure out who to pay it back to? The problem is you don't know who paid the tariff. So if the tariffs were paid by American consumers, inflation would have gone way up. That didn't happen. So American consumers didn't pay much of it. So somewhere the American company that was selling the imported product or the company that made the product in a foreign country, maybe they paid the tariffs. It's nearly impossible to tell. The Federal Reserve Bank, I think in Philadelphia or New York, had three of their economists and a professor from Columbia do a study. They claimed that 90 percent of the tariffs were paid by American companies and American consumers. Now, I don't think that's correct because inflation would have gone up. But still, it gives an opinion that says, well, we're not really sure who paid the tariffs. So to try to give that money back and unwind this is impossible. I think the Trump administration will come up with something and they'll try to do some negotiating. Really, what they have to do is go to Congress and say, look, this is what my tariff policy is. If Congress will approve it, then he can put on the tariffs. But as you know, we have a very divided Congress. The opposing party votes no on virtually everything that Trump wants to do. I think a lot of this is going to get tied up in litigation over the next maybe even year or so to figure out what's going to happen. In the meantime, Trump's going to try to use other laws to put the tariffs in so that he can maintain the positive impacts that the tariffs have had on the U.S. economy and U.S. national security. Yeah, Trump said that as well, that he'll be in litigation on this issue regarding refunds for the next five years. But just one last thing, Michael, can you talk to us about what you see have been the impact of tariffs up to this point today? So I think the impact's been very positive. There has been virtually no inflation caused by the tariffs. When President Trump entered office, the inflation as measured by the Consumer Price Index was 2.9%. It's now running on an annual basis 2.4%. So he brought the inflation rate down. Obviously, the tariffs had virtually no negative impact on prices. On the positive side, companies are coming over here to build plants, and that will help bring our manufacturing base. Remember when he started, he said the manufacturing base in the U.S. has been decimated over the last 40, 50 years. We want to bring the manufacturing back to the U.S. As Trump noted, we used to make all the cars now in Mexico and Canada and South Korea and Japan. They make the cars, and China makes a lot of the parts. He wants that manufacturing to come back to the U.S. Using tariffs, he was able to do that. I'm not sure what's going to happen now going forward. Well, anyway, Michael, it's always great to hear your insight. Thank you for speaking with us today. Always my pleasure, Don.