Trump’s Tariffs Are Back — And Crazier Than Ever

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“What does the ideal presidential candidate look like?”

Donald Trump has shown you that to be not boring to be a showman. Can get you really, really far in this environment. I'm Preet Barara. And this week, the Atlantic staff writer Mark Liebervich joins me to discuss the latest chaos out of Washington and what to expect from the upcoming elections.

The episode is out now. Search and follow stay tuned with Preet, wherever you get your podcasts. [Music] Welcome to Prof. Markets. I'm Edelson.

It is July 22nd. Let's check in on yesterday's market vitals. The major indices climbed, as chip stocks rallied, Intel popped nearly 9% after the company announced it is reducing its head count. Meanwhile, Brent Crude climbed, as strikes continued in the Middle East and President Trump dismissed the idea of immediate talks with Iran.

The yield on tenure treasuries rose to its highest level in two months on inflation expectations on calcium, the odds of the rate hike before 2027 hit 62%. OK, what else is happening? Just when you thought it was over, tariff chaos is back with a vengeance. Trump announced that the US would be imposing 50% tariffs on most Canadian goods

next month. Climate Canada had discriminated against US industries. Prime Minister Mark Carney said that he and Trump would accelerate trade talks before they take effect. Meanwhile, a 25% tariff on certain imports from Brazil

takes effect today. And on Friday, the 10% tariffs that Trump administration imposed in February are due to expire. US trade representative James and Greer said, "Pote, we expect to see some action soon

as the administration prepares a new round of replacement tariffs." So, lots of tariff news to get into here. Joining us to discuss this news. We are speaking with Peter Harrell visiting scholar at the Institute of International Economic Law at Georgetown Law School.

Peter, welcome back to the show. It's great to see you. Lots has happened here on the tariff front. It's a subject that we talked a lot about last year. Stop talking about for a while.

I guess because other stuff was happening. Now we're back to talking about it. What's happened with tariff? So, over the past six months.

“Well, I think part of why we stopped talking about it was we all hoped”

that maybe although Trump would maintain high tariffs, he'd do so in a more orderly and disciplined fashion than he did last year and as we're seeing this week, that's not really the case. If you go back to February, Trump lost a case at the Supreme Court. Where the Supreme Court ruled that the legal basis he'd been using

any of his tariffs last year was illegal. And the Trump administration pivoted back in February

to kind of a phase set of fallback tariff plans with the idea being first.

They'd have what's called a section 122 tariff, which would be in place from Lake February until Friday morning here in the east coast of the United States. And then they would have something called a 301 tariff that would come into place to kind of replace the 122 Friday morning as well.

That's not where we are, like although they'd signal there'd be order.

“What we in fact have seen is the 122 is going to expire Friday morning.”

They've not yet finalized the successor tariff, the 301 tariff. Maybe they'll do that today. Maybe they'll do that tomorrow. If you are importing a product into the United States today from Asia, from Europe, you don't know what tariff rate you're going to pay on Friday at this point.

So, that's kind of chaotic data point number one. Caldic data point number two is the Trump decided, as you said, yesterday that he wanted to impose 50% tariffs on tens of billions of dollars of US imports from Canada, which is sort of allegedly over Canadian discrimination against the United States, using literally a provision of the smooth, holy tariff act that may or may not still be on the books.

Obviously a piece of this is that he's trying to negotiate with Canada over a trade deal, and he wants to put pressure on Canada, but that's sort of chaotic piece number two. And then, chaotic piece number three, as you say, as we have these tariffs on Brazil, which are kind of around the fact that Trump doesn't like Brazilian tech regulation, and he also doesn't like their online payment platform.

And so he's threatening, he's imposing tariffs on them as well, and, you know, probably more to come the way this is going. So, just to dial into the Canada tariff for a moment, I mean, there are all of these different laws and these different sections of the law that he's using to enact these tariffs, you know, in section 122, which we had and expires, and then maybe they were going to use 301.

The Canada tariff from my understanding is using 338. I don't know what that means, but I have a quote from Scott Lensium of the Kdo Institute who said that this is the, quote, nuclear option for Trump tariffs. Is that the right way to describe it? Like what, what is different about these tariffs versus the ones we've seen so far?

So, it's called section 338, because it was section 338 of the tariff act of 1930 better known as the smootballly tariff act. So, he's literally using the smootball of tariff act here. This is a provision of law that actually has probably, does not appear to have ever been used

to impose tariffs before. I mean, since 1930 has never actually been used.

It was used in 1935 and probably in the 1940s to threaten tariffs, but we're never, they were never actually imposed. So, what Trump is doing here is dusting off this very old statute, which may or may not really be legally valid anymore, because as Scott said, what Trump wants is a flexible authority. The problem Trump has had with the 123 tariffs and with the 301 tariffs, is they all require either investigations or they have like a limit on rates,

so they have all these constraints on them. What Trump clearly likes, I think, about 338 is that it is a, you know, again, assuming it's still lawful, a very flexible law that, you know, he thinks just lets him say, can it discriminate against the United States up to 50% tariff?

“So, that's what he's reaching for. It's something that gives him that kind of flexibility that he so enjoys”

to put tariffs on on short notice, very high rates, sort of at his whim. Something I don't fully understand. I mean, the Supreme Court literally said that the tariffs were legal. That happened back in February. And since then, there have been a multitude of different ways by which Trump has continued to enact tariffs. And he's figured out multiple different loopholes or different sections of the law by which to do that. And here we are,

I mean, several months later, it's been over a year since the initial liberation day. tariffs are still in effect. And it seems as if he can just keep on doing this. I guess, keep on kicking the can down of the road of just, oh, I'll use this section. I'll use this section. I'll use this section. And then I guess the Supreme Court has to play catch up. I mean, couldn't this go on for the next several years? Couldn't this just be the remainder of his presidency four years of tariffs? I mean, what is stopping him

from continuing to do what he's doing?

“Yes. I think he raised a very important point, and which is that I think we are quite likely to see”

Trump continue to use lots of different tariff authorities, all of which have been and will be challenged in court, but his ideas to kind of run out the clock and kind of keep them going through throughout his term. And then, you know, somebody else can pick up the pieces afterwards if the courts, you know, much later rule all of these fallback tariffs unlawful as well.

I mean, just to unpack that a little bit. So the first statute he used was this thing called IEPA,

which actually didn't have the word tariff or duty or anything in it. It was kind of an emergency

having lost the use of this emergency power statute that didn't have the word tariff or duty,

“now what he's doing is using different statutes that are definitely tariff statutes.”

You know, they contain the word tariff, you know, the present may impose tariff, that kind of thing. But that he is he is using them in a different way and much more aggressively than they've ever been used before. And so now we are seeing, you know, as he uses these other tariff statutes now, but uses them in these, you know, potentially unlawful ways. What we're seeing is lawsuits come to challenge them, but our court system, you know, any lawsuit is going to take at least a year to go through the courts. And so he's just going to keep trying to play,

play out the clock. Now, but this is where I find 338 and what he's doing on Canada kind of dangerous here,

“because one benefit that we had gotten from the Supreme Court decision in February is that Trump”

was not really turning tariffs off and on and off by whims. So he'd maintained a 10% tariff under 122. He is, you know, said that they're going to maintain that under 301, but actually you hadn't seen a lot of changes in tariff. You actually didn't see many changes in actual tariff rates between February and this in this week, because these other laws had required some process or had some limits. What he's trying to do with 338 is not only maintain high rates under these, these other statutes 301 and 222, but 338 is something that lets him kind of, you know,

using his sharply turn the tariffs off and on again and bring that chaos back in addition to the high rates. We've actually had, as we talked about at the beginning, you know, a couple of months without the chaos, even if the rates remained high. Something I don't understand and, you know, maybe you can help me with it or maybe not, we'll see. Why is he doing this? Because as we've seen, as we've seen through the multiple inflation reports that we've gotten over the past several months,

where the inflation number goes higher, we had three and a half percent, which sure it was lower than 4.2 percent,

but the target rate for the Federal Reserve is 2 percent. We were hovering around that number. Then we slapped the tariffs on we added a 4 percentage point to inflation. Then we invaded Iran and we blocked up the straightaway moves, added a 4 percentage point of inflation, possibly higher. We're hovering around 4 percent, and this is the biggest problem for American households right now, which is inflation and it's effect on the affordability crisis. And this is what people are so upset with him about.

So what I cannot for the life of me understand why he would, after it was ruled illegal by the Supreme Court, double down, not with 10 percent, with 50 percent on Canada.

How do we even justify this? Every independent study, at least, I've seen and suggests that something like 85 percent to 95 percent of these tariffs are being paid by Americans, either in the form of cost pass through to customers or by companies temporarily eating some of the costs, planning to pass it through on a go forward day.

“So it's not really that the foreigners are paying most of these tariffs. We are definitely paying these tariffs. And as you say, inflation is front of mind, I think it's hard to explain this policy agenda other than the personality of Donald Trump.”

I think that there is, you know, a substantial amount of support, both in his administration and, you know, among some quarters in Washington for, you know, targeted tariffs to protect even fairly aggressively some specific industries here in the United States. And I think you'd find broad support better for worse, not saying I like the economics of it, but for, you know, more tariffs to protect the steel making industry, which he has done, or more tariffs to protect, you know, maybe the auto industry.

Again, I think what he's done is not actually been helpful to those industries, but there is support for that concept. There's very little support for the depth and breadth of tariffs and the kind of rates we're passing on Canada, other than the Donald Trump has loved tariffs personally since the 1980s. And what you are seeing is a presidentially driven objective here that his administration is implementing. And I do think it is coming from him because, you know, one thing we saw after the Supreme Court ruled the tariffs illegal back in February, and they started reimposing that they actually reimpose them at lower rates, right?

They had been an average rate of about 15%, before the Supreme Court ruled the male illegal, they brought back in 10% ish tariffs.

And I think that is what we're going to see going forward kind of despite the economic costs.

So as though this is kind of the blunt instrument he has found with which he can bludgeon people that he doesn't like, nations that he doesn't like and in the process also bludgeon himself, or at least the American people that seems to be what's happening. I mean, he said, I don't know what Canada's done wrong, but supposedly they have discriminated against the US, and this is his response.

“I mean, you say you think this will continue to what extent do you think this will continue? Is this move the first of many tariff moves against individual nations?”

Over the next few months, is this kind of the canary in the coal mine, I guess? Well, I am worried about that. I do think he likes the way he can bludgeon foreign governments. Well, to think we have to take seriously, Ed, that although every economist we can sit here, we can read the studies that say the Americans are paying the tariffs. I think Trump made genuinely believe just wrongly that the foreigners pay the tariff. I think we have to kind of take seriously, he may just believe that, although he's completely wrong on it.

And he is, you know, as George W. Bush used to say, the decider. So, you know, here we are, I worry this is going to be the beginning of future moves.

“As I said, I think, you know, we had seen some efforts after the Supreme Court laws by Jamison Greer as you as trade representatives of some of the other folks in the administration to have a, you know, somewhat more disciplined.”

This is still kind of high rates, but somewhat more disciplined tariff process that was kind of like, okay, we're just going to have 10% on everybody. You might not like 10%, but it's kind of manageable, it's not higher than 10%, but Trump is clearly interested in getting back into the game of when he's mad at Europe because they won't support his Iran war tariff Europe. He's clearly, you know, mad at Canada because it's not giving him what he wants on USMCA, but more than that, it's not becoming the 51st state.

So, tariff Canada, and I am worried that this is a harbinger of more chaos to come, although I hope I am wrong on that. All right, Peter Harrell is visiting scholar at the Institute of International Economic Law at Georgetown Law School, Peter. Thank you so much for joining us. It's great to be on. Thank you. Well, for the break, the power not to warn of whether this deal hits a snag. And for even more markets insights, you can subscribe to my weekly newsletter simply put at simply put.praftingmedia.com.

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Try Gusto today at gastro.com/markets and get three months free when you run your first payroll. That's three months of free payroll at gastro.com/markets. Again, that's Gusto.com/markets. There's a civil war happening in the Democratic Party, and if there's one place that that's playing out most clearly, it's in Michigan.

A crucial Senate primary battle in Michigan that could determine control of Congress in November.

Congresswoman Haley Stevens, an updool LCA, a progressive Democrat, and a moderate Democrat. In the end, it all comes down to the dreaded e-word, electability. But in Michigan, one candidate is trying to turn the electability concept on its head. If we think that voters walk around asking, "Where do I sit on some theoretical left-right spectrum?" Then in theory, the bulk of the voters are somewhere in the middle. The problem though is that that model hasn't really accurately predicted our politics for a very long time.

“If Michiganers wanted moderate, why would they have elected Donald Trump twice?”

Dr. Abdul El-Sayet is making the progressive case for America first, and he's trying to settle the Democrats at the illogical battle in the process.

I must stand here, and this is America, actually. Catch us every Saturday on YouTube, or wherever you get your podcast. We're back with property markets. Paramount's bid for Warner Bros. just hit a major speed bump.

On Monday, a judge paused Paramount's 110 billion dollar takeover of Warner Bros. Discovery.

The temporary restraining order was granted at the request of 12 state attorneys general who sued to block the deal on anti-trust grounds. They argue it combines too much of the cable and movie business, meaning higher prices and fewer shows. The polls last 14 days, but it doesn't end there on August 3rd. The judge will hear arguments for a longer freeze, one that could last months, and if the deal doesn't close by September 30th, Paramount owes WBDA taking fee of more than $600 million a quarter on the news both Paramount and Warner Bros. Discovery fell 3%.

This development leaves investors asking a very important question. Is this deal ever going to close? Answer that question. We're speaking with Rohan Goswami. Business reports at Semfor Rohan. Great to see you. Paramount, Warner Bros. The deal that we've been talking about for months, yet another roadblock. What's happening here? What do you make of it? It's why costume and a contest ceremony is so fun. Because on one hand, you've got Paramount, which has been quite resistant to the idea that they would be willing to spin off or sell any of these assets.

“And it is rapidly facing a reality that it might have to, right?”

As you point out, the TRO, the temporary restraining order is only for 14 days. Now, we can get a second one. It's another 14 days, but that's kind of a point. It brings us to this August 3rd showdown around this preliminary injunction, and that's really the whole battle, right? Because it's in that situation, and in that hearings, the judge will decide whether the state's case has merit or whether it doesn't. Now, it should be clear here, right? Whether or not the judge finds in favor or against Paramount for the states here, right?

We are in for a long, slog here. The question now becomes, is Paramount willing to decide that it wants to spin off or sell some assets and make an offer to the states, hey, maybe we'll get rid of a studio, maybe we'll get rid of CNN, we'll get rid of some of the cable assets, or does it say, as it's intimated publicly and privately, that it's willing to take this fight to the Supreme Court. The Allison's, of course, have a bottomless pocket,

but even they don't want to be paying $600 million, maybe $1.2 billion if this stretches another quarter after this, if they can avoid it.

Just looking at the list of IP that they would own, they would own, I mean, if this deal goes through, the Allison's Paramount, they would own HBO, CNN, TNT, TBS, they don't own all this IP, like Harry Potter, and TZ Comics, Game of Thrones. I mean, it's a lot of stuff, and it seems to be, that seems to be the problem, really, at least in the lawsuit, that it's too much stuff. I mean, how much merit is there to the anti-trust argument in the lawsuit, and would it be enough to say, okay, we'll shed this asset and this asset and we'll take these other ones?

You know, if you'd ask me, my personal opinion, and this is, again, based on conversations with rival media executives with anti-trust lawyers, before the TRO was issued, I would have said, not much. This is a political suit. Bonta has cobbled together an interesting coalition of Democrats that opposed to steal for different reasons, whether it's David Ellison's ideology, or they have a general hatred of monopolies and think all murders are bad.

This was a complicated group of people that came together to try to stop this lawsuit. Then came the judges ruling on Monday on the TRO, and she made an interesting series of points that seemed to suggest she's not really buying Paramount's arguments.

“If you were going to the clock, you remember that the states made an argument that Paramount's deal would be anti-competitive in three spots.”

So there's general theatrical release. That's all movies. Then there's blockbuster theatrical releases, which was a new category that sort of raised some eyebrows. How do you define a blockbuster?

Are those really a thing anymore when like Hollywood could spend two hundred million dollars on a movie?

And it's a flop. And then cable news. Cable TV, I should say, right? So these three categories are where Warner was, the Warner of Paramount combination was supposed to be anti-competitive. Generally by that argument, the judge seems to have.

“And that's all that matters in the short term, right?”

Paramount, whether if they get a negative decision here that rules against them, is going to appeal. They're going to take this to the Supreme Court. I mean, David Ellison is indifagently or he is not going to give this up, but it's going to cost them. So the question really becomes at what point to go back to my previous point. At what point does Paramount try to cut their losses?

Now Rob Bonta has privately intimated publicly denied intimating this, but has privately intimated per puck. That CNN divestiture would be enough potentially to stave off further action. Again, reinforcing this idea that this is really about politics, not anti-dressed. It is striking. You look at the states that have sued.

All 12 of them have a democratic attorney general.

And I'm not saying that that actually takes away from the merit of the lawsuit, but it does seem like that's a lot of what this is about.

We know that the Ellison's have gotten closer and cozier with the president. We know that the president has said nice things about David Ellison and call them a great guy. He's called Larry a great guy too, is dad. So I mean, to what extent do you think this really is about politics about having something like CNN?

“And another important cable asset under the control of a guy who seems to be at least close with the president?”

I mean, there's a terrible irony in the fact that David Ellison donated Joe Biden's reelection campaign donated a huge amount of money. This is a guy who is historically a Democrat. Now, of course, I have an asked him what it's political ideology is today. And any number of observers can look at what he's done to CBS or the hires he's made, and gone well, maybe he's not a Democrat anymore. But I would actually argue that the politics of the case really do matter.

If you look at other situations where the states have intervened thinking about live nation, right, to break up the ticketing giant, or in a situation where HP bought this company called Juniper, you actually had a bipartisan coalition of attorneys generals from the state. So, to try and break up or stop those murders. Here, where it becomes inherently political and problematic is in who and why they've brought this suit. Because again, on the face of it, bond to analysts with Warren and Chris Murphy and others in this coalition have laid it out in no uncertain terms, right?

This is a fight between people who are aligned with Trump and not aligned with Trump. It is a very political situation. Does that have a bear in the law? It shouldn't, but of course it will and it does. Just thinking about how the shareholders feel about all of this.

It's not great. Not great. So, power amounts don't just down 25%. One of our discoveries stock is down five percent.

“I mean, yeah, how do the shareholders feel about this?”

And do they have a say in what will be a transformative decision in moment for the company? No, they are there along for this ride. Whether they like it or not. Now, Zazelob David Zazelob that's the CEO of Warner Brothers, of course. In a remarks at employee town hall did say, you know, look, if this deal does get broken up,

we'll go back to running our business and we'll figure out from then. Remember, before they started this process, Warner Brothers had been on the road to a split. A kid to what you and I talked about last time, Comcast has done. The problem of course becomes that's very little consolation for shareholders. This is not a stock that you trade at the levels that it has.

It has been inflated by greed, by ego, by David Ellison, sort of limitless pockets and desire to build a media empire. Take that away and the stock will, of course, plummet investors will rotate out. This will very well become, you know, a dead man walking or a private equity ticket or what have you. Right. So shareholders have very limited recourse.

Now, of course, what they can do and you'll see this in contested situations is put public pressure on the age. Whether that's hiring their own lobbyists, engaging their own consultants, launching grassroots campaigns. Again, these are sophisticated hedge funds that we use any and all tools at their disposal to get a deal done. But it's really going to come down to you and we have no doubt that David Ellison will execute on this. Paramount's ability to fill their fiduciary duties under the merger agreement.

Now you'll recall there are multi-billion dollar break fees associated with this merger.

Those are not things that anyone wants to pay out of hand. So that's one motivator. The other motivator, as we know, is David Ellison really, really wants these assets, really, really wants these assets. And so he is extremely motivated from conversations with people around him and around the company to get this done at any cost. Even if that means as we reported last week, leaving California all together.

I mean, all options are on the table for this guy to get the deal across and to make it clear to this day. Hey, don't mess with us here. Final question and you know what's coming. Prediction. Yeah.

How does this whole pan out? Do the Allison's pull it off before September? What do you think? I think they do. Before September?

Hmm. I think I'll back out then. Do they pull it off?

“I don't know if it'll be by September, but look, I think never say never.”

They are we are never going to spend anything off or offer any concessions to the states.

We're going to fight this to the ground. We'll see how they feel when they're in their hook for $600 million. That looks very different. I think they get this done. Whether it is through a structural remedy, right?

Getting rid of the cable assets, getting rid of a studio, getting rid of CNN. Or by litigating this all the way up to the Supreme Court, which making Delaware him the chief legal officer at Paramount, the former anti trust chief under Trump 1.0 has said they are going to do. So my money is on the L.S. and on Paramount.

This is based not just on my opinion, but conversations I've had with other media CEOs, with bankers, with lawyers, with people around this, but it's going to be a long slog. And it's not going to be fun for shareholders at all. So you know, buckle up.

Bro, I'm going to swallow me. Is business reporter at Semfor? Rowan? Thank you so much. And always a pleasure.

As you may already know, Oracle Stock has gotten battered this year, down 35% year to date.

“It's even had its credit rating downgraded to triple B minus.”

That's just one wrong away from junk status. But yesterday, the company got even more bad news. The state authority of Wisconsin, where Oracle is looking to build a massive one gigawatt data center, just demanded that Oracle pay a collateral bill worth $7 billion.

Why? Well, largely because of Oracle's shitty credit rating.

“Oracle borrowed $43 billion to build data centers over the past year.”

That's against its $67 billion in revenue.

But revenue doesn't pay debt down free cash flow does. And Oracle's free cash flow is negative. It burned roughly $24 billion over the same period. So taking on record debt while running negative cash flows. Well, that is a great recipe for a default, which means that every time anyone

agrees to loan Oracle money, they are now taking on an increased level of risk, which means they must now charge Oracle higher interest rates to compensate for that risk.

The result, higher borrowing costs, and a $7 billion collateral bill,

which will cost Oracle more than $100 million a year. We have set it before we will say it again. Bubbles aren't built with equity. They are built with debt. And increasingly, the AI buildup is becoming reliant on debt.

Oracle is the company most obviously in the danger zone.

“And that's why the markets are now flashing red.”

But let's be clear. It isn't a loan.

An estimated $489 billion of AI related debt has been issued this year.

And the hyperscalers, such as Oracle, account for only 40% of that number. In other words, there is a lot more risk lingering beneath the surface right now. The question is where? Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss,

and engineered by Benjamin Spencer. Our video editor is for our Williams, our research team is down shallon, Christian Adonicue, and Mia Sovario, and our social producer is Jake McPherson. Thank you for listening to "Proftary Markets" from "Proftary Media." If you liked what you heard, give us a follow.

I'm Ed Alison. I will see you tomorrow.