Dear Reader,
Happy Friday! TGIF.
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The big news this week is a court struck down President Trump’s use of the International Emergency Economic Powers Act of 1977 to place all these tariffs.
Why is this important to us? Here’s why:
First of all, anybody who claims this is a partisan thing, let me assure you…
This is a three-panel court of three sophisticated, federal court judges deciding this thing and two of them are Republican.
One was appointed by Trump in his first term, one by Reagan and one by Obama.
So this is really bipartisan.
These people are thinking on a pretty high level. This is a very well-respected court.
I want to read you what they wrote, which I thought was very instructive.
“The question in the two cases before the court is whether IEEPA, the International Emergency Economic Powers Act, delegates these powers to the President in the form of authority to impose unlimited tariffs on goods from nearly every country in the world…
“The court does not read IEEPA to confer such unbounded authority and sets aside the challenged tariffs imposed thereunder.”
This is very important stuff.
When our founders wrote our constitution, they gave tax and spend authority to Congress and basically, a tariff is a tax, as Trump himself has said.
A tax on foreign goods, by a different name. Because it’s a tax on external things.
Congress has basically delegated its authority to the executive under this International Emergency Economic Powers Act.
And a lot of those folks on Capitol Hill have said privately, basically, “we don’t think this is going to survive a court challenge, he may be doing it under this act, but it’ll get knocked down in court.”
Now, of course, the markets cheered.
This kind of overtook the NVIDIA news, which I’ll talk about Monday. (Very impressive numbers from NVIDIA.)
Look, this tariff thing is becoming like a meme.
I don’t know if this week it’s been whispered around Wall Street - it’s been written about in The Wall Street Journal - something called “the TACO trade.”
The TACO trade theory is that whenever President Trump announces tariffs and the market cracks, you should buy stocks because he always chickens out.
Unless it’s a small country Trump can really bully, that has to bend, it’s not happening.
The E.U., China, any real competitor pushes back and Trump blinks.
This really hurts the credibility of the Trump administration to go back and forth.
I am hoping the Trump administration is going to try to appeal this.
But a federal judge, federal court, with such a reasoned decision is not likely to get overturned.
It’ll be very interesting to see what happens.
I would not get too excited.
President Trump is a wily kind of cat.
And Lord knows, he can do all types of things to delay this.
But I am happy a court actually said no.
That the power is with the people’s representatives - the Congress.
There’s no war - there’s no emergency.
This belongs in Congress.
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