0:00 Hey everyone, it's Richard. You're watching the Plain Bagel, your number one tariff news channel here with a big update. As you've probably heard, the US Supreme Court has officially ruled that Donald Trump's tariffs brought under the International Emergency Economic Powers Act, or AIPA for short, are illegal, upholding a lower court ruling and forcing the White House to lift all previously imposed tariffs under this law. A pretty big update to the global trade war timeline and one that was celebrated by many online who saw this as dealing a meaningful blow to Trump's trade tariff agenda, effectively unraveling what's been one of Trump's favorite tools for international relations and negotiations. At least that was the case for a solid couple of hours until the president came out with a fiery press conference highlighting that not only had the
0:46 Supreme Court failed in stopping its tariffs, but he would actually be coming back with even more tariffs, seemingly in retaliation, I guess, uh, with the president the same day as the ruling announcing a new temporary 10% tariff against most other countries and later on Saturday announcing that this rate would be increasing to 15%. Albeit, as of the time of posting, we've only so far seen the 10% tariff go into effect on Tuesday, February 24th. So, naturally, it all raises a number of questions. Who's impacted here? What's the deal with these new tariffs? And what's going to happen to the estimated $175 billion of tariff revenue that's already been collected that's now been deemed illegal? Well, that's what we'll cover in today's video. in addition to what laws the president might use in the future to reintroduce tariffs and
1:32 increase levies further beyond the 10 or 15% we've seen so far. And we'll start by going through the Supreme Court ruling itself. You can see that the case is Learning Resources versus Trump, President of the United States. Learning Resources is actually an Illinois based uh toy company that brought this case against the White House, albeit the case was actually combined with another similar case brought by the liquor company VOS Elections and 12 US states, which is why you can see multiple plaintiffs here. And in the case, the plaintiffs alleged and the Supreme Court justices upheld that AIPA does not authorize the president to impose tariffs. AIPA is a 1977 law that among other things allows the president a number of powers to restrict transactions and trade in the presence of a quote unusual and extraordinary threat. Essentially providing a way for the president to bypass congressional
2:18 approval in the face of a threat to national security. However, the justices ruled 6 to3 with three conservative justices dissenting that while the president has the power to block imports and exports under this law, the power to explicitly tax is not covered by these powers and rests solely with Congress as outlined in the Constitution. Something that was supported by president with no president having ever previously imposed tariffs under AIPA. And the justices argued that Trump's tariffs violated the major questions doctrine uh which requires that actions by the government's executive branch of significant consequence be clearly authorized by Congress rather than through ambiguous language. In other words, because AIPA doesn't explicitly give Trump the power to tariff
3:04 countries, and because Trump has been meaningfully leaning on this law, handing out tariffs like Oprah Winfrey with how he's been making sure everyone gets one, these actions should require congressional approval. With the justices indicating, quote, "The president must point to clear congressional authorization to justify his extraordinary assertion of that power. He cannot." Now, as for which tariffs are impacted here, the justices highlighted two main sets of levies. The first being the fentanyl linked tariffs Trump first announced early in his term against China, Mexico, and Canada. Specifically, the 10% tariff on Chinese goods, 25% tariff on Mexican goods, and the heightened 35% tariff on Canadian goods. And the second set are the more broadly reaching country specific reciprocal tariffs uh that Trump first announced on April 2nd or the so-called
3:51 liberation day with this being inclusive of the many updated tariffs that came afterwards. Meaning that any of the countries that saw their names appear on those bristle board posters and beyond have now seen those tariffs effectively erased. Meaning that we finally seen justice for the Herd and McDonald Island penguins who have been wrongly targeted by tariffs from the beginning. Now, importantly, that does leave other tariffs unaffected here. Uh, we will continue to see the sectoral tariffs brought under section 232 of the trade expansion act of 1962, which if you recall includes levies on most steel and aluminum, auto parts, certain copper products, soft wood and timber, furniture, and semiconductor imports. And these will continue to impact a lot of countries. You can see from this map that even the sectoral tariffs alone still capture a lot of America's global
4:38 trade partners. However, according to Reuters, these other nonaipa tariffs only made up about a third of the revenue generated from Trump's tariffs in the last quarter of 2025, demonstrating that this ruling still strikes down the lion's share of Trump's tariffs with Pen Wharton budget model economists estimating that AIPA tariffs provided 175 billion in revenue for the US government since their implementation. Which brings us to the question, what happens to this collected $175 billion now that the tariffs that raised this amount were deemed illegal? Well, there still remains a pretty big question mark there. While it's largely expected that this ruling will compel the US government to refund these illegally collected levies, the ruling, as highlighted by the dissenting opinion, says nothing about how the
5:24 government should go about doing so. essentially leaving the issue to lower courts like the US Court of International Trade to decide, which means that we're probably in for years of further litigation before we see any money returned here, with in fact Trump and members of his administration suggesting that they'll be fighting the matter in court. And of course, it's very unlikely we see a fair repayment of the tariffs here. While Trump long maintained that it would be foreign companies who would be paying predominantly for these tariffs here and there is some truth to these companies covering some of the costs by lowering their own prices. That tone is obviously going to change now that it's time to pay the amounts back. And while US consumers bore the brunt of tariff costs via the passalong price hikes, any refund we do see is likely to go predominantly to importing companies to
6:09 whom the tariff fees were explicitly charged when importing goods. And even then, because getting a refund will likely require some sort of application or potentially even uh fighting the matter in court, smaller companies who don't have the resources for these things are going to be pretty disadvantaged when compared to larger companies like FedEx, for example, who just this week became the first large US company to file a lawsuit following this ruling for the reclamation of tariffs, with a number of other companies, including Costco, having also sued the government prior to the judgment. And while the idea of paying a dividend tariff to a bunch of people has been floated in the past, that would likely require congressional approval and would be unlikely to meet the requirements of a reimbursement here. But hey, while you might not get a tariff refund here for the higher prices you've been paying, you can rest assured that at least the large corporations are taken care of.
6:56 Now, in terms of the broader impact of this ruling, there's obviously a mix of factors here. While the returning of tariff funds could be a positive for the economy, it does leave the government in an awkward position with its budget. Uh given that tariffs were a key offsetting force to Trump's higher deficits under the one big beautiful bill, the IPA tariffs alone that have been collected represent about 10% of the 2025 fiscal budget deficit. And obviously it's up in the air how much tariff revenue will be raised in the future. And there's a pretty big impact on price levels. The budget laba eel estimates that the complete elimination of these tariffs would reduce the average effective tariff rate faced by consumers from 16.9% to 9.1% and cut the expected price level inflation from tariffs in half from 1.2% to 0.6%. With the price impact
7:42 being even more significant when you dive into specific product categories. However, as mentioned, tariffs are seemingly not going away and may in fact uh increase as Trump has seemingly alluded to with Trump quickly replacing the illegal tariffs with a temporary 10% across the board levy under section 122 of the Trade Act of 1974. A section that permits the president to impose tariffs of up to 15% for up to 150 days to address large and serious balance of payments deficits. uh with that simply meaning any circumstance where the country is sending more money abroad than it is receiving uh something that doesn't require a formal investigation but Trump could argue regardless uh given the trade deficits the country does face with the US buying more imports than it exports now importantly
8:28 while the tariffs are being described as a baseline tariff here the white house did include a number of exemptions to this new levy uh with this including certain critical minerals and metals energy and energy products s natural resources and fertilizers that cannot be produced efficiently in the US, certain agricultural products, pharmaceuticals and pharmaceutical ingredients, certain electronics, passenger and other vehicles, certain aerospace products, information materials, donations in a company baggage, anything already subject to the sectoral section 232 tariffs we mentioned earlier, and finally any duty-free goods under the US MCA agreement with Canada and Mexico or textiles and apparel under the Dominican Republic Central America free trade agreement. So, you can see that there are some meaningful carveouts here. Now for Canada specifically, the change in tariffs we have seen is a bit less
9:14 important. Even though the country is seeing its general tariff rate fall from 35% to 10%. The country was already sending the vast majority of its products tariff-free to the US under the USMCA agreement. And for everyone else, as mentioned, the tariff is only temporary with it requiring congressional approval to be extended beyond that first 150 days, which seems very unlikely given that the House of Representatives amid all of this has already voted to cancel some of Trump's tariffs, specifically around Canada. And Congress faces upcoming midterm elections in November, just a few months after these tariffs expire. So, with tariffs being fairly unpopular in the US, that might not be something politicians look to support. But that brings us to what comes after this first 150 days. And while some might have their fingers crossed that it might be
10:00 the end of of global tariffs from the United States, that does seem very unlikely. Uh there are many different avenues through which Trump can reimpose tariffs here. The first of which, of course, being those sectoral tariffs that were already seen under section 232. While these do require an investigation by the Department of Commerce to demonstrate the national security risk, the president has now bought himself 150 days to sort through which sectors he wants to impact here. And even beyond the sector tariffs, there are a number of ways through which Trump could impose further levies. With in his response to the ruling, Trump specifically highlighting three other statutes with which he could impose further tariffs. The first two also come from the trade act of 1974. Uh the first being section 2011 which allows the US to impose product specific tariffs when increased imports are causing serious
10:45 injury or the threat thereof to domestic producers and section 301 which allows tariffs when trade deals are being violated or a country is putting an unjustifiable burden or restriction on US commerce with both of these sections requiring a formal investigation something Trump actually announced for the latter section along with his announcement of the temporary 10% tariffs. Then there's section 338 of the tariff act of 1930 whereby the president can impose country specific tariffs of up to 50% in cases where a country unreasonably discriminates against US trade. A section that doesn't seemingly require a formal review, but one that would likely face legal challenges if used in this sort of broad-based approach given some of the unclear details with the law. So, while some may have hoped that the Supreme Court ruling
11:32 finally signaled the end of Trump's tariff tirade, to his point uh with his rant after the ruling, there are many other tools in Trump's arsenal for keeping tariffs in place. But that's not to say the update doesn't matter. The ruling is still a pretty big blow to Trump's tariff agenda and foreign policy. For one, while the president has threatened higher tariffs here currently, the ruling has reduced tariffs pretty meaningfully for a number of countries. Uh, previously we saw most countries facing at least 10% tariffs with other countries facing AIPA tariffs as high as 50%. However, those rates have now all been replaced with a baseline 10% across the board, which for some countries like Brazil meaningfully decreases the levy paid on their exports. It's also led to some discontent from countries who have
12:18 already made trade deals with the US to lower their trade tariffs. Countries like the UK and the entirety of the European Union have not so far been granted any carve out in this new update and seemingly now faced the same rate as everyone else, including the potentially higher 15% rate despite making concessions around purchases, investments, and tariffs with the European Union actually delaying its own deal ratification as a result of this uncertainty. Now, US trade representatives have reassured countries that the US will be sticking to its previously negotiated deals. But given Trump's track record of pulling 180s on his own trade deals, we could see countries discouraged in their negotiations with Trump if there's concerns that he might go full Darth Vader and just start changing terms on people. >> I am altering the deal. Pray I don't
13:03 alter it any further. But above all else, while Trump again does have other tools in his arsenal, the ruling does take away one of the president's favorite big sticks here. Uh, previously Trump had been pretty quick to either threaten or impose tariffs under AIPA for a slew of at times seemingly unrelated or frivolous issues with Trump imposing AIPA tariffs against Brazil seemingly mostly because of the country's prosecution of former president Gier Bolsinaro in Switzerland because in a phone call with their former president, he quote didn't really like the way she talked to us. And of course, here in Canada, we've seen that firsthand with the country being threatened with a slew of tariffs for everything from the country's planned implementation of a digital services tax to its airing of an anti-tariff ad that
13:49 relayed a direct quote of Ronald Reagan on the negative impact tariffs have on the economy. But now, it's going to be harder for the president to impose tariffs on a whim like he's done in the past, with any future tariffs likely to require a more formal review. So, while Trump can certainly threaten future tariffs as leverage, something we've already seen in the midst of this decision with Trump warning countries not to play games around the trade deals and warning countries during his State of the Union address to stick to their negotiated deals if they didn't want to face his renewed eye under different tariff laws. The ruling does mitigate his ability to just bludgeon a country with levies whenever they do, say, or sound some way he doesn't like. So, we'll have to wait and see how this ultimately impacts the country's foreign relations. Uh whether we see countries
14:34 stick to the tone of their former and ongoing negotiations or if we see more push back and frustration amid the changing circumstances within the US. Trump could also use all this as an out for the policy leading up to the coming midterm elections. But with the president once again sharing his vision of replacing a substantial portion of income taxes with tariffs during his State of the Union address, we haven't seen any indication that he'd be backing away from this policy. But again, we'll ultimately have to wait and see. Thanks for watching. I hope you found this video helpful. If you did, please do make sure to like, subscribe, all that good stuff. It does help the channel tremendously. And let me know your thoughts on the update from the Supreme Court. Are you happy with the ruling? Do you view it as pointless and expensive given the need to now reimburse tariffs here? Any and all thoughts, welcome down below. Thanks again for joining and as always
15:19 be safe out
