Latest news with #JustinWolfers
Yahoo
3 days ago
- Business
- Yahoo
Tim Miller: ‘He wants to feel powerful and the tariff card allows him to do that'
Tim Miller, former RNC Spokesperson, Justin Wolfers Economics Professor at the University of Michigan join Nicolle Wallace on Deadline White House with reaction to Donald Trump's continued blame game for the impact that his tariffs are having on the global economy, with the President accusing China of breaking their trade agreement.
ABC News
3 days ago
- Business
- ABC News
Tariffs a sideshow to greater US problem: economist
Samantha Donovan: Well up until the last couple of weeks, the financial markets have swung wildly after Donald Trump's every utterance on tariffs. Recent reaction to the President's trade policy shifts has been more muted though. Australian Justin Wolfers is a Professor of Economics and Public Policy at the University of Michigan. He told our business correspondent David Taylor, tariffs are now a sideshow to a much greater concern for the international community. Justin Wolfers: The Constitution gives the power over tariffs to Congress, not the White House. Now over the years, Congress has given some of that power, handed it off to the White House, but only in a very limited and constrained way. So a simple reading of the rules would say the President can't do this. So in order to have across the board tariffs or what he calls reciprocal tariffs on every country in the world, he's had to call it a national emergency and invoke the Emergency Powers Act, which is interesting, first of all, because that act says nothing about tariffs. And secondly, there's no emergency. The so-called emergencies, the US has trade deficits with many countries. Bilateral trade deficits are not themselves a problem. So it's been in the works that this was going to get knocked down and it finally hit court last night. The court said this is quite clearly unconstitutional. It was a three judge panel, an Obama judge, a Reagan judge, and a Trump judge. So it seems like a pretty clear decision. So that all seemed pretty clear until the US federal government, the Trump administration, filed an appeal with the Court of Appeals. The Court of Appeals unsurprisingly agreed to hear the case. And while it's waiting to get its work done, so while they're reading the documents and so on, it decided to stay, that is to say reinstate the Trump tariffs. All of this is going to be on a pretty expedited schedule. So within a couple of weeks, they're going to come back with their decision. If, as I expect, they find this to be unconstitutional, then the tariffs will be back off again. Then we'll be off to the Supreme Court. We'll see the same drama play out one more time. And then what happens after that is what's really interesting. Because this is saying you can't have across the board tariffs, but recall Congress delegates certain tariff powers to the White House. And it turns out there's a lot of other statutory authorities that they could use. They're a little narrower. And so for instance, that's why the tariffs on steel and aluminium and cars are going to persist because they did not come through this overreach. And it would be easy to get further tariffs on semiconductors and pharmaceuticals and so on. So my guess is the White House lawyers are just going to find other ways of creating international trade havoc. David Taylor: That kind of goes to my next question though, Justin Wolfers, based on your understanding of recent history and Donald Trump, what is, and I know this is a very complicated and difficult question to answer, but where is Donald, where would you think that Donald Trump's mind is at? What do you think his next move is likely to be? Justin Wolfers: His lawyers will be telling him as of this afternoon, Mr. President, the statutory authority we were using will come under question. But if you want to push ahead with tariffs, I've got lots of other ways that you can do it. My guess based on past history is he'll say that's terrific. Let's keep going. David Taylor: Given that, and given how much you know that financial markets can't stand uncertainty, the market reaction, the financial markets reaction over the past 24 hours, I would describe as being quite muted compared to... Justin Wolfers: I agree. David Taylor: Yeah, why? Why? Justin Wolfers: Yeah, I've given this a lot of thought. So the S&P 500 rose one and a half percent when this was announced. That's quite muted given that the day that Trump... So, and this announced all of these tariffs are illegal and they're off. Compare that to seven days after Liberation Day when Trump announced a 90-day pause on the tariffs that led US stocks to rise by about 9%, like six times more for a pause as opposed to it's unconstitutional and you can't do it. So a few thoughts here. One is perhaps this is markets betting that this is going to be overturned at a later point. Another possibility is markets, even if markets don't think it's going to be overturned, and I don't think it's going to be overturned, I think the use of the Emergency Powers Act will be ruled unconstitutional. But even so, Trump has other ways of imposing tariffs. So I suspect that this is markets understanding someone's getting in the way of Trump creating tariffs the way he wants to, but he's probably just going to come back and do it a different way. If you're really interested in this, I'm going to give you one more interpretation. So the markets were incredibly volatile in early April when he announced Liberation Day tariffs, they tanked. When he paused, they soared. They acted like this was a huge thing. Now there's two interpretations of that. One, markets believe that tariffs are so fundamentally important to the profitability of American businesses they have no choice but to rise and fall dramatically every time something happens. If that were true, then you would have thought that the Supreme Court making it unconstitutional should have caused markets to absolutely soar today, and they merely rose a little. So the other possibility is that the original policy announcement was so incoherent, so poorly thought through, so dramatic, so unconstitutional on its face, so absurd, so much overreach in both the economic, political, and legal domains that it signalled an administration that's out of control, and that could do a lot of damage. And so maybe that's what markets were learning in early April. They reacted a little bit to tariffs and a huge amount to learning that this is an economically unhelpful administration. And if that's the case, then all that we learned today, when the courts say Trump wasn't allowed to do tariffs in a particular way, you're only going to see a small reaction because it's still true that the White House is full of lunatics, and that still weighs on people's minds. Samantha Donovan: Professor Justin Wolfers from the University of Michigan. He was speaking with our business correspondent, David Taylor.
ABC News
3 days ago
- Business
- ABC News
Legal showdown looms over Donald Trump's 'Liberation Day' tariffs
A US appeals court has paused Thursday's trade court decision that found many of the Trump administration's tariffs were illegal. The Court of International Trade ruled that US President Donald Trump had overstepped his authority when he imposed the "Liberation Day" tariffs in April. But the United States Court of Appeals for the Federal Circuit has put an immediate pause on that decision. It paves the way for a legal showdown between the Trump administration and the US legal system. "The [US] Constitution gives the power over tariffs to Congress, not the White House," professor of economics and public policy at the University of Michigan Justin Wolfers told the ABC. "Now, over the years, Congress has given some of that power, or handed it off, to the White House, but only in a very limited and constrained way. "So a simple reading of the rules would say the president can't do this. "So in order to have across-the-board tariffs, or what he calls reciprocal tariffs, on every country in the world, he's had to call it a national emergency and invoke the Emergency Powers Act. "First of all, that act has nothing about tariffs. And secondly, there's no emergency," Professor Wolfers said. The US has trade deficits with many countries, and has had so for 50 years. Professor Wolfers says financial markets and academics had assumed for some time now the tariffs would get knocked down in the courts. This week they did, with a three-judge panel: an Obama-appointed judge, a Reagan-appointed judge and a Trump-appointed judge. A US District Court judge, in a separate case this week, issued an injunction that also said the Trump's tariffs were not constitutional. "So that all seemed pretty clear until we hit this afternoon when the US federal government filed an appeal with the Court of Appeals," Professor Wolfers said. The Court of Appeals agreed to hear the case. Until the case is heard, the tariffs will stay as they are. "So within a couple of weeks, they're going come back with their decision," Professor Wolfers said. "If, as I expect, they find this to be unconstitutional, then the tariffs will be back off again. "Then we'll be off to the Supreme Court. "We'll see the same drama play out one more time. "Ultimately, my guess is the White House lawyers are just going to find other ways of creating International trade havoc." Some key questions then remain. How far is Mr Trump prepared to go in implementing the tariffs, and why have financial markets largely stopped swinging wildly in response to tariff news out of the White House? "I'm an economist and what I can see is a consistent pattern of behaviour, which is the president genuinely believes that tariffs are a good idea," Professor Wolfers said. "His lawyers will be telling him, as of this afternoon, Mr President, the statutory authority you're using will come under question, but if you want to push ahead with tariffs, I've got lots of other ways you can do it. "My guess, based on recent history, is that he'll say, 'That's terrific, let's keep going.'" The financial markets have become incredibly volatile. In early April, when he announced the so-called Liberation Day tariffs, share markets plunged. When Mr Trump paused the tariffs, stocks soared. The response to these latest developments has been noticeably muted. "Now there are two interpretations of that," Professor Wolfers said. "One is that markets believe that tariffs are so fundamentally important to the profitability of American businesses, they have no choice but to rise and fall dramatically every time something happens. "If that were true, then you would have thought that the Supreme Court making it unconstitutional should have caused markets to absolutely soar today, and they barely rose a little. "The other possibility is that the original policy announcement was so incoherent, so poorly thought through, so dramatic, so unconstitutional on its face, so absurd, with so much overreach in both the economic, political, and legal domains, that it signalled an administration that's out of control. "And [one] they could do a lot of damage. "And so maybe that's what they [financial markets] were learning in early April. "They reacted a little bit to tariffs and a huge amount of learning that this is a an economically unhelpful administration. "And if that's the case, then all that we learnt today when the courts say, 'Trump wasn't allowed to do tariffs in a particular way,' you're only going to see a small reaction. Investment bank Barrenjoey's chief interest rate strategist Andrew Lilley says global leaders, policy makers and financial markets are waking up to the idea that Mr Trump's decisions are more bold, unpredictable and chaotic in his second term. "People doubted that Trump would have the stomach to take any action that would cause the stock market to decline by 10 per cent or more," Mr Lilley said. "Everybody always said Trump, at the end of the day, he wants to change things, he wants to build a legacy of being more than just a tinkerer. "At the end of the day he is a populist, and a populist doesn't want to take any action that causes the stock market to fall by more than 10 per cent. "So the fact that [he implemented the tariffs], knowing for sure, surely he knew, that it would evoke a stock market reaction. "And when after 24 hours he hadn't recanted and he hadn't softened. "In fact, he stepped up the tariffs. "This caused us to reshape our view of 'what is the stomach that Trump has?' "And now we realise actually this is a very different version of Trump from Trump that we saw from 2016 through 2020." The US Appeals Court has ordered the plaintiffs in the trade court case — a group of small businesses — to respond by June 5, and it ha given the US government until June 9 to reply.
RNZ News
5 days ago
- Business
- RNZ News
Economist Justin Wolfers breaks down US tariffs
US President Donald Trump says he has agreed to delay a 50 percent tariff on European Union imports until July 9. Professor Justin Wolfers teaches Economics and Public Policy at the University of Michigan. He translates the latest fiscal drama for Nathan. Tags: To embed this content on your own webpage, cut and paste the following: See terms of use.
Daily Mail
5 days ago
- Business
- Daily Mail
Wall Street traders mock Trump with new acronym amid tariffs
Wall Street traders have coined a new acronym mocking President Trump as they game his wild tariff policies to make millions. Stockbrokers have taken to telling each other to TACO when hedging their bets on Trump's market-altering trade policies - stood for 'Trump Always Chickens Out.' The term has reportedly gained traction among investors and day traders who say they have found a strategy to make huge profits off Trump's predictable tariff rollouts. The president has made a habit of threatening massive tariffs on nations and industries around the world, which send markets plunging, before he 'chickens out' days later and doesn't actually go ahead with the levies. In an example just this past weekend, Trump announced a crippling 50 percent tariff on European imports , which dropped the Nasdaq by 1.5 percent while treasury yields and the dollar plummeted. But just two days later, Trump abruptly paused the move after he said he received a 'very nice call' from European Union President Ursula von der Leyen , quickly repairing the market's losses. Financial advisory firm Exit Stage Left Advisors told the New York Post that they have seen traders make huge profits off the dips in Trump's tariff rollouts. 'Once he delivers bad news, investors are buying those stocks when they are beaten down waiting for him to chicken out and watching those stocks rebound in value,' the firm's president Ted Jenkin told the outlet. University of Michigan economist Justin Wolfers added to Barron that this emerging strategy is unprecedented in the way the financial markets work with the White House. Wolfers noted that 'there was no BACO trade' under President Joe Biden and 'no CACO trade' when Bill Clinton was in office, for example. 'It was always taken as a given that when the president spoke on Monday, he would likely still mean it on Tuesday,' he said. 'That's no longer true. But what's really hard is that it's not even obvious when it'll be true, and when it won't be. Madness.' Trump's latest moves on his tariffs saw a continuation of his announce-then-backdown strategy as he admitted a 'very nice call' was enough to halt his levies on the European Union. The president said a call from von der Leyen earlier this week led him to agree to extend his deadline for trade talks until July 9, because they needed more time to 'reach a good deal.' 'It was my privilege to do so. The Commission President said that talks will begin rapidly. Thank you for your attention to this matter.' Trump threatened on Friday to intensify his trade war after expressing frustrations that trade talks were not moving quickly enough, saying he wanted steep new import taxes to start on June 1. The threat sent global stock markets plunging. The president took to Truth Social on Friday morning to accuse the EU of being 'very difficult to deal with' and 'taking advantage' of the US. But European Commission President Ursula von der Leyen urged him to delay the tariffs until July, which was the deadline he had originally set when he announced new tariffs in April.
