So is that all we need to just dispense with the legality question and say, yes, what the president has chosen to do is legal?

Certainly not with respect to the imports into the United States.

So as we just heard Secretary Wright say, actually, the Graham Act itself is largely about sanctions on Russia and on other countries, not the United States, other countries.

not just China and India, but including China and India that are trading with Russia.

And Congress did give President Trump a waiver in Section 115 of those sanctions against sort of Russia's trade with China, with India, with countries in the Middle East and the like.

And he chose to exercise it.

There's actually a separate law going back to 2022 that Congress passed called the, I believe it's the Ending Importation of Russian Energy Act.

But there are people in the administration who are saying, well, actually what the president has done here is he's using leverage, right? That this is a way to actually entice Putin back to the table and for them to actually reach a point where there is an agreement between Russia and Ukraine to end Russia's hostilities, to put it lightly, on Ukraine.

And how did that go? I mean, do you have you seen a shift? Yeah,

no, I mean, there's a very clear shift.

I mean, indeed, as a friend in Brussels put it to me a couple of months ago, and I think it was very apt, and I won't name him because it was a friendly conversation.

He said, look, that a friend who works for the commission then works for the commission now.

said, you know, look, when when the Biden administration was around, you wanted to work with us on China, but we weren't ready.

Now we're ready.

And we're not sure the Trump administration wants to work with us.

But, you know, I think we're all waiting with bated breath to see what happens right in the midterms, because I think that's going to be a clear signal as to what type of daylight even Republicans may want from the administration.

Peter, talk to us a little bit about this law and how you see this potentially intersecting with this license and the actions that the administration has undertaken.

So let's go back to when this law was passed and the couple of months prior to this law being passed.

So we're in the first quarter of 2022.

We are, uh, or I guess in, by the time Congress is acting, very early in the second quarter of 2022.

You know, we are two months or so after Russia has launched its widespread, uh, invasion of eastern Ukraine, and we have seen a series of executive branch actions to impose sanctions on, uh, Russia, uh, in kind of end of February and, uh, through the, the, the first part of March in response to its invasion of Ukraine.

So we'd seen sanctions out of the White House pursuant to an executive order, uh, Executive Order 14024, targeting, you know, the Russian sovereign wealth and assets, targeting some major, you know, Russian companies of different, uh, different kinds.

And then I wanna say it was on March 8th of 2022, uh, President Biden issues this second executive order, or an additional executive order, EO 14066, uh, which prohibits, A, the importation, this is an executive order issued pursuant to IEEPA.

And so the question here is, did this particular licensing action specifically alter U.S. foreign policy or was it actually GL 134 and 134B that is was the significant alteration to U.S. foreign policy and this is just a follow on action?

Peter, talk to us a little bit about this law and how you see this potentially intersecting with this license and the actions that the administration has undertaken.

So let's go back to when this law was passed and a couple of months prior to this law being passed.

So we're in the first quarter of 2022.

We are, I guess, by the time Congress acting very early in the second quarter of 2022, we are two months or so after Russia has launched its widespread invasion of eastern Ukraine.

And we have seen a series of executive branch actions to impose sanctions on Russia in kind of end of February and through the first part of March in response to its invasion of Ukraine.

So we'd seen sanctions out of the White House pursuant to an executive order, Executive Order 14-024, targeting, you know, the Russian sovereign wealth and assets, targeting some major, you know, Russian Companies of different kinds.

And then I want to say it was on March 8th of 2022, President Biden issues this second executive order or an additional executive order, EO-14066.

And so the question here is, did this particular licensing action specifically alter U.S. foreign policy, or was it actually GL-134 and 134B that was the significant alteration to U.S. foreign policy, and this is just a follow-on action?

So talk to me about Smoot-Hawley and Canada and the future of the USMCA.

Yeah, so as you say, this is Section 338 of the Smoot-Hawley, uh, Tariff Act.

I am not sure why this didn't get repealed, um, over the years.

There is kind of a debate, uh, that will be play out in court, uh, if these tariffs come into force and they are challenged about whether it was implicitly repealed.

But anyway, Congress never explicitly repealed, uh, this provision of the Tariff Act.

I think the way to understand these tariffs at a kind of policy and political level, Jacob, is as you suggested, is about the backdrop.

It's against the backdrop of the USMCA, uh, negotiations, and I think the, uh, President Trump and, um, the US trade rep, Jamieson Greer, are frustrated with their perception that Mexico is being more accommodating In, um, uh, in the USMCA negotiations than Canada is.

Hell, I'm not cut out for it, so.

And why is that? Why are we assuming that – A hundred year old statute that has never been used for tariffs before can't be, you know, saddled like a horse and deployed for modern in the modern economy at presidential will.

Yeah, I mean, that is certainly how, you know, the Trump view is that he can do exactly that.

I think you're, you know, if these tariffs come into force and you, we will see litigation.

I'm sure all of Trump's trade actions have been litigated.

I think there are a couple of different layers of argument that will be made here.

So one set of arguments that former Bush administration official and former lawyer Phil Zelikow has been making, is that actually Section 338 was implicitly repealed by subsequent trade statutes in the 1960s and 1970s, and that although it is still Obviously, technically on the books, these subsequent statutes, provisions of the Trade Expansion Act of 1962 and the Trade Act of 1974 meet the standard of an implicit repeal by fully occupying the same way.

So it's going to be a high bar to show an implicit repeal in court.

Which ones are those and who is suing?

And why is that? Why are we assuming that – A hundred year old statute that has never been used for tariffs before can't be, you know, saddled like a horse and deployed for modern in the modern economy at presidential will.

Yeah, I mean, that is certainly how, you know, the Trump view is that he can do exactly that.

I think you're, you know, if these tariffs come into force and you, we will see litigation.

I'm sure all of Trump's trade actions have been litigated.

I think there are a couple of different layers of argument that will be made here.

So one set of arguments that former Bush administration official and former lawyer Phil Zelikow has been making, is that actually Section 338 was implicitly repealed by subsequent trade statutes in the 1960s and 1970s, and that although it is still obviously technically on the books, these subsequent statutes, provisions of the Trade Expansion Act of 1962 and the Trade Act of 1974 meet the standard of an implicit repeal by fully occupying the same way.

So it's going to be a high bar to show an implicit repeal in court.

Which ones are those and who is suing?

How would you kinda characterize, um, US trade and economic policy before President Trump?

Yeah.

No.

Well, um, John and Lester, thanks so much for having me on.

It's a real pleasure to join the, the podcast.

Um, you know, I think of US trade policy towards China, uh, prior to Trump, uh, as being defined by an era that kinda started in the late nineteen-nineties and went through about twenty fifteen.

Trump really was the rupture, but you could see some things beginning to change towards the very end, uh, of the, uh, of the, uh, the Obama administration.

Where his focus was, what he was trying to do? What, what did, what did he break glass on, um, in his first term?

Peter, do you have thoughts on the 301? Or if everything's been said, feel free to pivot to your thoughts on the durability of the 338, I guess, threat at this point.

Maybe a little more... open to the prospect of the courts ruling against this 301 than Stephen and Arun.

I certainly agree this is a harder case than the IEPA tariff case was.

And I certainly agree that USTR has done a lot to try to show that it is following the procedural steps that 301 requires.

So it conducted the investigation, it held hearings, it took public comments.

As Arun, as you just said, they actually did modify the proposed remedy to some degree in response to both the public comments where they expanded the list of excluded products.

And they also, it wasn't just India, I think it was five countries that between early June and late July adopted new import ban legislation or regulation.

And is the court going to second guess that finding? It's hard to see that.

What's happened with tariffs over the past six months?

[laughs] Yeah, well, I think part of why we stopped talking about it was we all hoped that maybe, uh, 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.

Um, you know, if you go back to February, Trump lost a case at the Supreme Court, uh, where the Supreme Court ruled that the legal basis he'd been using for many of his tariffs last year was illegal.

And the Trump administration pivoted back in February to kind of a phased set of fallback, uh, tariff plans, with the idea being first they'd have what's called a Section 122 tariff, which would be in place from late February until, uh, Friday morning, uh, here in the, uh, East, East Coast of the United States.

And th- then they would have something called a 301 tariff that would come into place to kind of replace the 122 Friday morning as, as well.

So they'd kind of pictured an orderly, uh, process.

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?

So d-do you see this having broader ramifications for other parts of the Trump administration's agenda and potentially other executive branch policy sets, or is this, is that maybe reading too much into the framing they adopted precisely to maybe get away from the more conventional foreign affairs lens some justices may have been pushing for?

I think it's gonna be a very interesting question to see how that plays out.

And I actually begin with starting in the opposite way, which is, and this comes through in the, the opinion, I think the, the court was worried that if they did not take this approach to the taxing power and if they took the view that the language of regulate dot, dot, dot importation or exportation, if the taxing power was embedded in this power to regulate, what would that mean in other contexts, right? Would that mean, you know, the clean air, uh, EPA under the Clean Air Act could impose pollution taxes? Would that mean, you know, motor vehicles to a highway safety department could impose taxes as, you know, motor vehicle, uh, regulations, right? So I think they were, they were thinking about it the other way, that if Congress did not, if they did not rule that Congress has to give away this taxing power cleanly and clearly, they could find future presidents discovering all kinds of taxing powers, uh, in the federal, federal code.

So I think they, that was reinforcing this view that, that, that, you know, as the history made clear, Congress did see the taxing power, the, the, the framers did see the taxing power as kind of a uniquely dangerous power that they wanted to vest, and that's where you saw the decision land.

The other thing that I think was relevant there, is relevant there as a historical matter and came through maybe a little bit in the opinion, although not that much, is that of course, when the framers were debating the taxing power, they were overwhelmingly talking about tariffs, right? The, the tax that was in place largely for the federal government at the time of the founding was tariffs, uh, for the first several decades of the government's existence.

Something like eighty to ninety percent of federal revenue was tariffs.

So ac-actually, this is the kind of tax that the framers were, were talking about, which is also just like a historical, uh, backdrop here.

Where do you see the, the strength and the potential vulnerabilities in this next wave of tariff action coming from the administration, and how do you kinda might see that play out?

Talk to us a little bit about w- why has the president turned to IEEPA, and what are the potential costs and risks that come with that?

Yeah.

So, so IEEPA, not something that, uh, we've historically thought about as a tariff statute.

It's, its origins are really as an emergency statute, uh, go- passed in 1977 as sort of a part of a, a package of post-Watergate, uh, reforms, uh, to various presidential emergency powers.

And the idea in IEEPA was, when it was enacted, was essentially that when there's an emergency in international relations, uh, whether it's a, a national security emergency like a war, you know, something like that, or whether it is a, an economic emergency, uh, the president should have some fairly broad, uh, authorities in order to respond to that emergency.

So basically, you know, it's, it, it's been used, uh, more than 60 times since it was passed for sanctions, uh, purposes.

It's also been used, uh, for a variety of, of other purposes, not all of which over the years have been for emergencies.

How do we expect them to be responding as well and adapting around the imposition of these different trade barriers? And how is that gonna impact the impact of those down the line and the relationship with these companies, not just with US government, foreign governments, but also with US consumers?

Uh, give us your initial reactions to the Supreme Court's ruling and also Trump's reaction to the ruling.

Yeah, so we got the Supreme Court decision on Friday.

I don't think the Supreme Court decision really came as a surprise for those of us who had listened to the Supreme Court hearing back in November.

It had seemed like a majority of the justices were skeptical of Trump using this 1970s era emergency powers law for his tariffs, so not really a surprise there.

You could also tell the administration wasn't really surprised because, while Trump, uh, obviously denounced the Supreme Court with his, uh, characteristic bravado, the administration was also quite ready to go with their backup plans.

As you alluded to, within hours of the Supreme Court ruling, uh, Trump had signed a proclamation using this other statute, also from the 1970s, to impose a ten percent tariff.

Um, he said on Saturday that he would increase that to fifteen percent, although as of Monday afternoon, he's not done so.

Probably not.

What do we make of the dissents?

Well, you know, the dissents, I think, are...

And you have two dissents.

Both of them are...

I mean, Thomas kind of wanted to go on separately with some originalist views of separation of powers.

The challenge for the dissenters here is that all three of the dissenters have previously... embraced fairly robust interpretations of both the major questions doctrine and the non-delegation doctrine, right? So they have to not only conclude that sort of a textual reading of regulate, importation, of property includes a tariff power, they then have to sort of explain why neither the major questions doctrine nor the non-delegation doctrine would be applicable here to limit the president's tariff power.

And you essentially see...

I understand he gave a temperate and intellectually serious press conference this afternoon.

So picking up on that point, Peter, you know, it seems like the goal, as you s- as you both have said, of maximum pressure, of, you know, reimposing all these sanctions, um, in particular in the oil sector, the financial sector, ha- has that been working? Have the imposition of sanctions been robust since those, uh, waivers were withdrawn and those larger sanctions on Iranian oil, uh, and on the finance sector? What's, what's going on with, with those sanctions?

Well, the first thing I think we need to talk about here is what actually the Trump administration's goals in, uh, withdrawing from the JCPOA and reimposing sanctions on Iran are.

Because although they have certainly talked about and continue to talk about seeking a, uh, a better nuclear agreement, uh, as Richard, as Richard says, I actually think there are, are fairly significant, uh, divisions within the administration about what the actual goals are.

I mean, we've seen, uh, Secretary of State Pompeo, for example, uh, say that what the US actually wants is a, i- is, is a frankly pretty sweeping comprehensive agreement with Iran that would address not only, uh, nuclear issues but also, uh, Iran's actions throughout the Middle East, its, uh, domestic human rights situation, um, within Iran, uh, and a whole range of, a whole range of other issues.

And I think that actually reflects a, a major shift in perspective on Iran compared to the Obama administration.

The Obama administration, of course, recognized that the US had many, many issues, uh, with Iran, including its activities in the region and, uh, domestic human rights situation, but really chose to prioritize first and foremost the nuclear issue.

And I think the Trump administration just has a much more conflicted view, uh, on the prioritization of the nuclear issue versus, um, uh, all of these other issues, uh, in the relationship.

You know, would that be possible? How would it happen technically? And, you know, for, for both of you, do you think Iran would actually do that? Do you think our allies would do that? Russia, China? Like, what, what's the landscape look like for a Biden administration if what they wanna do is come in and revive the deal?

Okay.

... uh, in the following ways.

If you go and talk to pretty much anyone in the semiconductor industry, and if you've talked to them and you guys have talked to them over the last couple of years, you hear a lot of concern about Intel's health.

You know, Intel made a couple of huge strategic missteps.

They decided in 2007 that they did not wanna produce chips for the iPhone.

You know, huge strategic, uh, misstep.

They decided in the mid-2010s that they were not going to bet on something called EUV lithography, which is advanced lithography that TSMC uses to make what are today, hands down, the world's most advanced chips.

... on how foreign entities are reacting?

What are kind of your, your initial thoughts? What are the implications of this move?

Yeah, so this is, uh, a big move out of the administration.

Obviously the administration has taken a tough on immigration set of policies across the board, but this is really the first time they seem to be moving against, uh, sort of high-skill immigration as opposed to, you know, more blue-collar, uh, kind of, uh, immigration, people crossing, uh, crossing the border.

Um, it is clearly gonna have implications for the tech sector.

The tech sector is the biggest user of these visas, which basically let, um, people with, uh, higher-skilled professional qualifications come to the US for between one and six, uh, years to work in specialty fields.

Clearly gonna have implications for the tech sector, but that's not the only sector that this is going to hit.

Although we think about H-1Bs as being some of the big tech platform companies as well as, uh, startups.

Mm-hmm.

Is this legal for the president to do?

I think there are questions about legally how they are gonna structure this.

So if we, if we look back, back in 2022, so three or four years ago now, Congress appropriated money for the CHIPS Act.

So the CHIPS Act had actually preceded getting money when Congress appropriated money.

And then the Commerce Department went through a period of giving grants which are clearly authorized by the CHIPS Act to a range of companies, including Intel, including a company called TSMC which is a Taiwanese company, including Samsung and others, to give those companies incentives to build semiconductors here in the US.

And the reason the government didn't take... ownership in those companies then was really twofold.

First, there's a question about whether it's legal, but second, you know, these are companies, these are not, this is not a bailout situation.

Bigger picture here, Peter, what do you see going on?

Yeah.

You know, in sort of late '21 into '22, got the then Biden administration, but also folks on Congress, it wasn't just sort of a Democrat Biden thing.

Folks in Congress, uh, focused on the strategic competition part of this, and what is China, uh, where are they going with AI? What are the choke points that we might have to slow their development of AI? And that really gave, uh, rise in October 2022 to the first big US semiconductor export controls, where the Commerce Department essentially cut off, uh, most of the highest end semiconductor sales, uh, to China, as well as various, uh, manufacturing equipment and inputs to try to limit, uh, China's ability to develop indigenous, uh, production, uh, capabilities.

And then that- that initial export control regime from October '22 got expanded a couple of times.

Um, most recently in April of this year when the Trump administration paused, uh, sales of the H20 chips, so the NVIDIA H20 chips, uh, to China.

Sure NVIDIA, you know, shareholders are gonna suffer a little bit if you can't export to China, but it's not worth the, the however many billions of incremental revenue that the government's gonna generate on a 15% take rate."

rate."Yeah.

So, I think the Trump Administration is probably doing a couple of things here.

Is that not in and of itself a potential security threat, Peter?

Well, let me begin by making, Meghna, a disclosure similar to yours.

I actually maybe five, six years ago now bought my then elementary school-aged son a DJI drone and had exactly the same experience you did.

This is just a remarkable piece of technology that a then maybe seven-year-old could fly right out of the box with his grandfather.

And it certainly brought home to me the appeal of these things and why we see so many people using them, whether hobbyists or for agricultural or industrial use.

But it is the very ease and ubiquity of these things that as they have spread and as policymakers have begun to dig deeper, into the security risks, I think bring home how serious the security risks are.

I mean, there's a camera on that drone, as your son knows, as my son knows, that is taking live video shots of everything it's looking at and feeding that onto a server somewhere.

Is that not

What are your expectations here in terms of what happens to this platform if and when it is actually shut down?

Yeah, so the ban's coming into force on Sunday.

And I think that what you'll see on Sunday, if you pull the app up on your phone, you'll probably get a notice on the app saying it's not available in the US.

That is what happens in India.

That is what happens in India, which banned TikTok back in 2020.

That's not necessarily true.

TikTok could choose to keep the app live.

To the extent that you're familiar with exactly what the law says, is there a lot of interpretation that could allow for some flexibility here?