The Winners & Losers from Trumps New Tariffs

On February 20th, the US Supreme Court delivered a major legal setback to the cornerstone of Donald Trump's economic strategy by striking down about 2thirds of the tariffs that the administration had imposed. Specifically, the court ruled that the liberation day duties imposed under the International Economic Powers Act or IEPA were illegal. This was not a huge surprise to anyone who had been paying attention. Before reaching the highest court in the land, these duties had been ruled unlawful by the Court of International Trade and by a federal appeals court.

The legal issue isn't that the president can never impose a tariff. It's that the power to tax belongs to Congress under article one of the Constitution. And they've only delegated that power to the executive through very specific limited laws. The Supreme Court essentially ruled that the act, which doesn't even contain the word tariff, was never intended to be a blank check for trade policy.

Because investors had spent months watching this slow motion car crash in the lower courts, there was no major market spike when the verdict finally landed. In fact, the outcome was so predictable that even the family of one of the men helping run the policy was seemingly profiting from it. While commerce secretary Howard Lutnik was championing the tariffs in public, his sons, who now run his firm, Counter Fitzgerald, were reportedly buying up the rights to hundreds of millions of dollars in potential tariff refunds at a deep discount. Lutnik has denied being involved in these trades, but Wired magazine reported seeing a letter from the firm explaining how they were willing to pay 20 to 30 cents on the dollar to buy up tariff-free fund claims.

The reaction from the White House to the Supreme Court judgment was equally predictable. President Trump held a press conference where he described the justices as fools, lap dogs, and unpatriotic. He even claimed that the court had been swayed by foreign interests, which is a wild allegation to make against the highest court in the land. He even singled out some of his own appointees, calling justices Amy Coney Barrett and Neil Gorsuch an embarrassment to their families for having the audacity to read the Constitution literally.

Investors correctly assumed that the tariff man would do exactly what he ended up doing once the verdict was announced. Start rebuilding his wall ...