The transcript from this week’s, MiB: Special Edition: Neal Katyal on Challenging Trump’s Global Tariffs, is below.
You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.
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Bloomberg Audio Studios, podcasts, radio News. This is Masters in business with Barry Ritholtz on Bloomberg Radio.
Barry Ritholtz: I know I say it every week, but this week I have an extra, extra special guest. Neal Katyal is the former Solicitor General of the United States, where he focused on appellate and complex litigation on behalf of the Department of Justice. He has argued more than 50 cases before the Supreme Court. He is recipient of the highest civilian award by the US Department of Justice, the Edmund Randolph Award, which he received in 2011, the Chief Justice of the United States Supreme Court appointed him to the Advisory Committee on Federal Appellate Rules. He has won every accolade that an attorney can win. Litigator of the year, top 100 lawyers, 500 leaving lawyers in dc, the most financially innovative lawyer on and on the list goes. He just has a CV that is really not to be believed. I reached out to Neil because he was representing the plaintiffs in the big tariff case, VOS selections versus Donald Trump president, which he took over after the plaintiff’s won at the International Court of Trade in dc He argued the case in front of a full on bank hearing all 11 judges in the DC Court of Appeals.
Barry Ritholtz: We recorded this on Wednesday, August 27th, few days before Labor Day weekend. We finish the recording and lo and behold, two days later, the decision comes down. He wins a resounding victory, seven to four. The court very much bought into his arguments that the tariffs and any sort of taxes, duties, levies requires authorization from Congress. It is not within the purview of the executive branch or the President. The, so once we got that decision, I reached out to Neal again and on Sunday over the holiday weekends, I hopped off the beach. We got on the phone call for a half hour and recorded what he thought of the results, what he thought about the opinion, where the case is likely to go from here, how things look in terms of the, the odds that the Supreme Court are gonna hear this. I thought the entire conversation was absolutely fascinating.
Not just because, hey, this is news right now and because he won the case two days later, he’s just such a thoughtful, intelligent lawyer who really takes his role as an officer of the court and helping to define the jurisprudence of American law very, very seriously. Just such a bright, thoughtful guy who just wants us to respect the constitution. I thought the conversation was fascinating. I think you will also, we’ll start out with our postscript, the conversation after we found out that Cardell’s clients won at the appellate level. And then we’ll go to the entire hour conversation we had while we still didn’t know what the outcome of the case was. With no further ado my discussion with appellate attorney Neil Al. First off, Neil, congratulations.
You just won a major appellate case in VOS elections versus Donald Trump, so congrats.
Neal Katyal: Thank you so much. Yeah, I think I saw you and we had our interview the day before the decision came down. The way the Court of Appeals works like the US Supreme Court, they never tell you in advance when a decision’s coming down. And indeed it was a little, I think past five o’clock on Friday right before Labor Day, and I was about to leave the office and then I heard my email ding and I look at it and I’m like, well, I might as well see what this is. I assumed it was just some, you know, minor thing and they’re like, whoa. It’s the decision. And you know, Barry, they let me know the decision at the very same time late. They know, let the world know, because otherwise if they let me know in advance, you know, that’s private information. It, this is the kind of information that does move markets. And so they let the entire world know, including me at the, the very same time.
Barry Ritholtz: So, so let’s put this into a little timeline. We had our recording Wednesday, August 27th. The decision dropped around five o’clock on Friday, August 29th. Today is Sunday, August 31st. Everybody else is on the beach. I know you’re leaving for Europe in in a couple of days, but I wanted to just touch base with you and try and figure out where this goes from here. So, so let’s start out with the decision. I thought the majority, decision seven four your way, I thought it was a pretty powerful refutation of the executive’s ability to just impose tariffs, I don’t wanna say on a whim, but lacking the specific following of the A EPA rules and what an emergency actually is. Can, can you address that a little bit?
Neal Katyal: I think that the seven judges in the majority were saying exactly what we’ve said all along, which is maybe these tariffs are a good idea, maybe they’re a bad idea, but they can’t be imposed by the president’s pen alone. You gotta go to Congress and get that authorization that that’s our constitutional system. And what the seven judges said is, that’s exactly right, that the Congress has never given the President such as sweeping power to just do it on his own. And if they did, they said it’d be unconstitutional. But they said that isn’t what’s going on here. And the President has an easy fix. If he wants to, he could go to Congress and seek approval for the tariffs that he wants. That’s what he did the first time around. And as we talked about last week, you know, that’s something that failed in Congress. And so I, maybe that’s why he doesn’t want to do it. Obviously these tariffs are highly unpopular, but nonetheless, you know, the Congress is controlled by his party and you know, that’s the place to start. Don’t run to the federal courts to do what you can’t do in Congress.
Barry Ritholtz: So I wanna talk about the dissent in a bit, but let’s just talk about what the appellate court did, which I was somewhat confused by. Maybe you can clarify this. They remand it back to the International Court of Trade in DC which is a US court for findings about who this applies to. Like it seems sort of odd to say, well it only might apply to the litigants. What are we gonna have 7 million cases on this tariffs It, it would seem that either it’s constitutional or unconstitutional and that applies to everybody. Or am I being naive?
Neal Katyal: I think that’s basically right, Barry, that I think ultimately the question is are these tariffs legal or illegal? If as the court of appeals said they’re illegal, then the vast, vast majority of Trump’s tariffs are unconstitutional, legal can’t be imposed. And people who’ve been had them imposed, you know, may have remedies and recourses. What the court also did though, and you’re referring to a fairly technical part of the decision is it sent a case back to the lower court to evaluate the scope of the remedies. And that’s because the US Supreme Court just very recently in the birthright citizenship case, has announced some new ways of thinking about relief on parties and particular in class actions and things like that. And so I think the court federal circuit did the prudent thing here by just saying, with respect to that, I’d like the, we’d like the lower court to evaluate it. I think that’s pretty much a sideshow at this point. My strong hunch is that the federal government has a strong interest in resolving this question. After all, this is a really, you know, initiative of President Trump’s, it’s been declared unconstitutional. So I think they’re gonna go to the Supreme Court. I mean, again, I wish that weren’t the case. I wish they’d go to Congress, which is the way that our constitution commands things. But it, you know, according to the president’s tweets and the like, they want to go to the Supreme Court.
Barry Ritholtz: So what is the process like for this to go up to scotus first, the remand back to the district court? Not relevant. That’s just a very specific remedy question. Assuming the petition for Ari is, is filed by the government, what, what are the options? What might the Supreme Court do?
Neal Katyal: Yeah, so I think you’re right to say that the, the lower court proceedings on relief are relevant here. Indeed, the federal Circuit said that that lower court has no role at least until October 14th. ’cause they wanted to give the government time to file what’s called a petition for searcher, I, which is a formal request to the US Supreme Court to hear the case. The government is saying that in these tweets by president, the president and others, that they will file that petition for Cary, ask the Supreme Court to hear the case. And then it’s obviously up to the Supreme Court to decide statistically when the government asks them to hear a case, particularly in a, you know, one that has important consequences, the go the court does hear the case. So the court very well may set the case for oral argument and then there’ll be the argument from the two sides as to whether or not this lower court decision that we won is declaring President Trump’s terrorist unconstitutional, whether that will be upheld by the US Supreme Court.
Barry Ritholtz: So I was kind of intrigued by the dissent, which I’m not a practicing attorney anymore, so I I’m not up to date in, in what is the latest thinking in terms of art, but it sort of seemed like one of the, the dissents suggested that it’s an emergency if the president declares it, an emergency kind of makes that word meaningless. How, how did you read the significance of the dissent and what might it mean to, to the hearing if this ultimately goes to the Supreme Court?
Neal Katyal: I think that’s exactly right what you’re saying, which is, if the dissent were right, it basically reads the word emergency out of the statute. It gives carte blanche deference to the president. And the Supreme Court in an earlier case back in 1911, said, you can’t do that with the word emergency. And here, I think Barry, the other really important point is that the law that the president is citing a EPA doesn’t just talk about emergency. It requires it to be unusual and extraordinary. And the president’s own executive order when he imposed these tariffs, said that the trade deficits were persistent and gone on for 50 years in the opposite of unusual and extraordinary. And look, of course, you want the president in a genuine true emergency that’s unusual and extraordinary to have extra powers because if congress can’t meet to re you know, repel some threat or something like that, you want the president to have some gap filling power. This is the opposite of that. I mean, Congress is in session, they’re passing bill after Bill and the like. And of course they’re controlled by the same political party as the president. So the idea that Congress can’t act is, you know, to use the technical legal term poppycock
Barry Ritholtz: Let’s, let’s broaden this out a little bit. I think this is an important case because I’m a market participant and tariffs are attacks, they’re a headwind to consumer spending and other economic activities. But stepping back and looking at this from a constitutional standard, how much of this is focusing on how much authority the executive branch of the US government has? I I, is this a, an attempt to rebalance the, the, the three parts of government by this particular president? Or is this just no, we want our tariffs and we wanna stop all these bad things that the tariffs will cure?
Neal Katyal: Yeah, I view this decision not as a rebalancing of our constitutional separation of powers, but rather a return to what our founders’ original concept was, which was Congress makes the laws, the president forces them, the courts decide whether those laws are legal or not. And here what happened is you had a president who colored well outside of the lines and you know, asserted an extraordinary power that no president in American history has ever asserted on his own. And I think the court is doing here what the courts have done, time and memorial in other cases, whether it was the seizure of the steel mills by President Truman in 1952, whether it was President Bush’s law free zone at Guantanamo after the horrific nine 11 attacks, whether it was, you know, president Biden’s student loan initiative programs. In all of these cases you’ve had presidents that try and assert muscular powers and the court pushes back on them. And this is I think, a pretty extreme illustration of a president who’s asserting powers that he has no business asserting.
Barry Ritholtz: So at the appellate level it was seven four, the dissent was written by a justice appointed by President Obama. It’s kind of a little bit surprising to me when you look at the lay of the Supreme Court. I know a lot of people tend to look at that as Democrats versus Republicans, but the appellate attorneys I know and the people who are constitutional lawyers tend to look at it as originalists versus more modern interpreters. How are you looking at this case when it gets, assuming it goes up to the Supreme Court, how are you looking at the context of this case? I,
Neal Katyal: I love the question because you know, oftentimes people say things like, well the Supreme Court is appointed by Republicans so they only wrote Republican or nonsense like that. This is not my experience. I mean I’ve been lucky to argue 52 cases there and I just don’t see it in the same way as those kind of pundits see it. And you know, I think you’re right to say the decision by the seven to four courts, a good illustration of that, the dissent written by a judge who was appointed by a Democratic president, our majority opinion, the senior most judge in the majority is Judge Lori who was appointed by President Bush, but says that these terrorists are unconstitutional. So I don’t think it’s the right way to think about it. I think that there are people who take constitutional limits more seriously and others who want to defer and avoid getting the courts in the middle of something. And so maybe that’s one axis that sometimes could be used to predict outcomes. But here, I think no matter which way you look at it, the President just doesn’t have this power. You know, we might wish he had this power, it might be a good idea for him to have this power. But our founders were as clear as day in Article one, section eight, they said specifically the power over duties is one given to the Congress, not to the President.
Barry Ritholtz: So there are a couple of key issues. This is gonna turn on the Constitutionality article on section eight, the I EPA laws. And what is an emergency? Any other factors that might drive this that we should be aware of?
Neal Katyal: Yeah, I think there’s a couple. One is that the Supreme Court in recent years has announced something called the Major Questions doctrine. And the idea of that doctrine is to say, if Congress is giving the President some sort of power, they don’t hide it in vague terms. They say it really expressly and clearly, you know, justice Scalia’s phrases that Congress doesn’t hide elephants and mouse assholes. And at the oral argument I took that to even further, I said, you know, this isn’t just an elephant in a mouse hole, it’s a galaxy in a keyhole. It’s an extraordinary set of powers given to the President that claimed by the president. And you know, this doctrine, major questions doctrine, has been used very by the US Supreme Court repeatedly to strike down President Biden’s initiatives, whether it’s over greenhouse gases or whether it’s over student loans or whether it was over COVID vic eviction moratoriums and things like that. And I think that, you know, what the majority said in this opinion that we won just a couple days ago is, hey, what sauce for the goose is sauce for the gander? This applies to other presidential initiatives and including of course this one here. And that it would be a violation of the major questions doctrine for Congress to have not even used the word tariff or duty or anything like that in a EPA and then to have a president come along and say, ha, I can now do whatever I want.
Barry Ritholtz: So let’s, let’s expand this a bit. How creative was it of the administration to try and get tariffs imposed under a epa? I, is this something that’s just wildly outside of what a EPA originally was designed about
Neal Katyal: A hundred percent. Nobody, and I’ve read the legislative history behind I EPA su very carefully, nobody thought that this was about the tariff power. And so yes, they get a a plus plus for creativity, the Trump administration in coming up with an argument that not only no one in Congress thought no president for 50 years has thought, now creativity only gets you so far ’cause you have to be at least somewhat faithful and accurate to the original text and meaning of the law. And he, that’s where I think unfortunately they get an F and they fall down on the job.
Barry Ritholtz: So I have a pretty solid recollection of, of sitting in constitutional law classes and occasionally seeing a decision that was just perplexing. Although when you’re looking at something that’s a century old, a Dred Scott or a separate but equal type of decision, obviously you’re bringing a modern perspective, it’s very hard to see outside of that. I had the same, you and I spoke before we had the decision come down. I was kind of perplexed that this was even like a debate. It seems pretty obvious none of the normal rules for enacting tariffs, none of the procedures, policies or allocation of powers amongst branches of government was, was followed. So what do you imagine the government’s argument is going to be at the Supreme Court level?
Neal Katyal: Right. So Barry, I think the secret about Supreme Court and presidential power advocacy is this, I mean, no matter how creative and ridiculous the argument is, if the president voices it, it’s a court case and it’s gonna be taken seriously by everyone. ’cause it’s after all the precedent. Sure. And that’s why, you know, when I was the president’s top lawyer courtroom lawyer, I was very careful to only make the arguments that I thought had very strong basis behind them. Because you don’t wanna diminish that credibility that the government has with the US Supreme Court here. I do think that the arguments are quite a stretch for the administration to be making. And I think, you know, that’s what you saw reflected in the seven to four opinion. So what do I think that the solicitor general is gonna say to the Supreme Court? I think he’s gonna say what he’s been saying all along. The president says he needs this power, it’d be dangerous to unwind all of these deals and present it as a f accompli. And I just think that’s the wrong way to think about constitutional law, to allow a president to do what he wants in the interim and then say, oh, it’d be too dangerous to unwind it. You know, I think it’s better to get the constitutional rules right the first time.
Barry Ritholtz: So some of the arguments I’ve seen from the administration is not only are the tariffs complicated and we’ve spent all this time and effort negotiating them, which this would negate, but it would be a negative for the global economy. You will cause economic distress around the world if you throw these tariffs out. Seems like, seems like a little bit of a histrionic claim.
Neal Katyal: Well I have two things to say about that. And you know, and you know, we can defer to the President about whether the claim is right or wrong, whether it’s histrionic or the like, let’s just say it’s right, two things. One, if that’s right, it walks right into the constitutional problem, which is the major questions doctrine, right? If the administration is saying, oh, the economy is gonna collapse without these things, that’s exactly the kind of major question that you think Congress has to decide, not the president, number one. And number two, if it isn’t histrionic, if it’s really right that the economy is gonna collapse, then it’s the easiest thing in the world for the President to go to Congress and seek authorization. I mean, I don’t think the Congress wants the US economy to collapse and they’re of course members of his own political party that are running Congress. So there’s not even a politics barrier or anything like that.
00:22:20 [Speaker Changed] Like so what are we missing? It seems like this doesn’t survive on a constitutional basis. IEA doesn’t authorize it. If it’s a major decision, take it to Congress, what else is going on other than I want these tariffs and I don’t care how they, they get enacted. What, what am I missing here?
00:22:41 [Speaker Changed] I I’m not sure you’re missing anything Barry. I think you’ve got a president who’s taken an incredibly muscular view of his authority and has done all of this stuff to the international economy and is now saying, oh, too late to unwind it. I’m already done. And you know, that isn’t the way constitutional law works,
00:23:00 [Speaker Changed] Let’s just play this out. So by the time people hear this, I don’t think we’ll find out if the Supreme Court is gonna grant Ari immediately, but relatively soon if they’re interested sometime in the next few weeks. Is that, is that a fair timeline?
00:23:17 [Speaker Changed] It’s possible. It requires the government to file a ary petition and you know, in other big cases, you know, like Guantanamo or healthcare or the, like, there are those ary petitions filed by the government almost immediately. So we will see what the government does here, but certainly it’s possible that they file soon, in which case the Supreme Court could give us guidance as to whether they’re gonna hear the case in a matter of a couple of weeks.
00:23:43 [Speaker Changed] So let’s say that happens and the case is heard end of September, how soon do we get a decision? Yeah,
00:23:51 [Speaker Changed] I don’t think they’d hear the case at the end of September. ’cause there’s time for briefing for writing the legal papers and also for friends of the court to weigh in and write their own legal papers. So I think realistically we’d be talking about a court hearing and probably earliest November, December and, you know, maybe as late as February or March, something like that. So it’s gonna take a little while and it should take a little while. Barry, these are really important momentous questions and you know, not just momentous for right now, but momentous for American history and the role of the president because what the court says here will govern, you know, maybe just the case at hand, but it may govern other things as well. And so I think the court’s gonna wanna proceed with some caution and have time for adequate briefing from the parties. That’s my gut.
00:24:40 [Speaker Changed] So what are the state of tariffs presently? The, the plaintiffs in the original case had said, Hey, there’s only so long we could stay in business with these tariffs and we want a decision as rapidly as possible since they were found illegal by the appeals court. Do we have tariffs? Do we not have tariffs? What, what, what is going on?
00:25:03 [Speaker Changed] So what the federal circuit did is it kind of split the baby. It said that the tariffs will be on, the tariffs will be permitted, but only for 45 days while the government goes and go, government may go and ask the US Supreme Court to hear the case. And if they don’t hear the case, then the tariffs will be declared illegal and unconstitutional and
00:25:23 [Speaker Changed] Void. What are the odds that the Supreme Court chooses to not hear the case?
00:25:29 [Speaker Changed] I’m not gonna predict what the Supreme Court is going to do. That’s just not, you know, that’s, that’s their, I have to leave that for them and I’m just an observer on the outside. But I did wanna say that what hap what the Federal Circuit did by saying 45 days, is it cut the government’s time in half to file a ary petition. Normally they have 90 days to do so. And what the court here said is basically, no, this is too important. You’ve gotta, if you want to hear, have the Supreme Court hear the case, then you’ve gotta do it in the next 45 days. Otherwise these tariffs will be declared illegal.
00:26:03 [Speaker Changed] So there seems to be a judicial recognition of exactly how pressing this is. The, the Liberation Day was April 2nd, the lower court case I think was filed April 14th. And then there was a decision in May it was heard pretty rapidly. The Unbank case was heard in July of July 31st, I believe. Correct? Yep. And then a month later, we just, about a month later, we get the decision. So it seems like, you know, I traditionally think of corporate litigation as a game of delay, delay, delay. This really seems to be moving quite rapidly.
00:26:43 [Speaker Changed] It is moving rapidly and that’s common in presidential power cases because there’s so much at stake. And so, you know, I’ve been heartened to work with the government attorneys, the Trump administration attorneys on a fast time schedule. I think that’s been, you know, beneficial to try and move this case and its ultimate resolution along. But I think, you know, I think the bottom line for what happened just on Friday for all your viewers and listeners is the Trump tariffs were declared unconstitutional and illegal by a seven to four vote of our nation’s second highest court, the US Court of Appeals for the federal circuit. And now the question is, will the Trump administration go to the Supreme Court? And then of course, what will the Supreme Court do?
00:27:27 [Speaker Changed] And the clock is ticking. They have 45 days, which by my calculation is around October 15th or so. Is that about right?
00:27:35 [Speaker Changed] Yeah, I think it’s the 14th. Yeah,
00:27:36 [Speaker Changed] 14th. Wow. All right. So six weeks to go. We’ll be watching this really closely. Again, Neil, congratulations on your appellate victory. If this goes up, are, are you gonna be the one making the argument in front of the Supreme Court?
00:27:51 [Speaker Changed] No, that’s all to be determined. Who knows?
00:27:56 [Speaker Changed] So that was my conversation over the Labor Day weekend, right after we found out that he and his clients had won the appeal. Now let’s jump to the entire conversation that we had a week ago, while the outcome of the case was still up in the air. My masters in business conversation with appellate attorney Neil Al.
00:28:21 [Speaker Changed] Let, let’s spend a little time just talking about your C background and career Dartmouth undergrad JD from Yale. What was the original career plan?
00:28:31 [Speaker Changed] The original plan was for me to be a professor of history recently. Yeah. I had gone, I went to Dartmouth College as you, you noted, I probably was one of the last kids admitted to Dartmouth. I was not a particularly great high school student. And I had this professor Doug Haynes in history at Dartmouth who basically taught me to write and taught me how to think. And I was so grateful to him and I felt like I should do that with my life is go and give back in the way that Doug had given me this incredible gift. And so in my senior year, I say to Doug, I was like, you know, I ask him to have lunch with me and I say, I’d really like to be a history professor and, and you know, frankly, you’re the one who inspired me and I want to do this.
00:29:15 And he thought about it and he said, honestly Neil, I don’t think you should be a history professor because it’s really tough and it’s hard to get tenure and you’ll have to start in some, you know, small town in the middle of nowhere. It’s hard to meet a spouse and so on. He said, look, you’re, you’re at that point I was a national champion debater and he said, my advice to you is to go to law school. And in particular he said, go to Yale Law School, which is known for creating law professors and you can do all the same stuff you wanna do, but as a law professor where you would get paid three times, it’s easier to get tenure. Your life is a lot easier. So I did that. I applied to Yale Law School, I got in again, probably one of the last kids admitted.
00:30:00 And at the law school I had these incredible professors who did the same thing that Doug Haynes did for me in history in other areas, constitutional law and criminal law and the like and these incredible professors who taught me again how to think and how to write. And so I was committed to being a law professor. I clerked first for Guido Calabresi, who was the dean of the Yale Law School, was put on the Court of appeals and then for Justice Steven Breyer. But all through that time I knew I wanted to be a law professor. So I applied while I was clerking to teach. And at the age of I think 26 years old, I took a job teaching at Georgetown Law and that was the plan for my life to be a law professor and nothing but a law
00:30:43 [Speaker Changed] Professor. And do you still do any teaching
00:30:45 [Speaker Changed] These days? I do. And I love, I love it. And in many ways it’s my favorite job I’ve ever had. But there’s a lot else going on in the world these days. And so, you know, it was a little bit by accident that I fell into this litigation thing. Yes, I was a national champion debater and so I was comfortable being on my feet, but I was really, you know, dominating, my dominant thinking was be a law professor, write these theoretical articles that changed the way people think about the law and teach students. So that’s what I thought I was gonna do. And then something happened, which was, we had the horrific attacks on September 11th and I was bumbling around trying to figure out what to do. I was teaching at Yale Law School that year and, and you know, my students and I, we decided to try and help first responders get benefits and stuff and you know, we weren’t particularly good at it, but it was something.
00:31:38 And then President Bush announced that he was gonna have these military trials at Guantanamo Bay for suspected terrorists. And I looked at that, I’d served in the Justice Department briefly and, and we had the embassy bombings of Al-Qaeda at the time. And so I looked into could we have military trials? And we concluded they were obviously unconstitutional. So I went and looked up, what’s President Bush doing here? What’s the source of authority for this? And you know, it wasn’t particularly compelling. In fact it was really weak ’cause the president was saying he was gonna set up these trials from scratch. He was gonna pick the prosecutors, pick the defense attorneys, write all the rules for the criminal trials, define the punishments and offenses, including the death penalty seems
00:32:23 [Speaker Changed] Even handed and fair. Right? What’s your objection? Yeah,
00:32:25 [Speaker Changed] And you know, even the last lines of the executive order said the courts have no business reviewing what I’m doing, the no writ of habeas corpus. So I went into my constitutional law class and said, you guys always tease me because I think the president should have such strong powers and nothing the president does is unconstitutional. Well here’s something that’s obviously unconstitutional. And in the class was a senator, it was a staffer for Senator Lahey who was then the chair of the Senate Judiciary Committee. And so she told him about me and he had a hearing and I testified and said, look, I don’t know if you want to have these military trials or not, but the one thing I’m sure of is that it can’t be done with the president’s stroke of his pen. You need Congress to approve it. And this is of course gonna be relevant as we talk about tariffs later. It’s the exact same architecture over the argument. And so that’s how I testified. Nobody listened. So then I go and I write a law review article with Lawrence Tribe, the nation’s most, most preeminent constitutional law.
00:33:22 [Speaker Changed] So you Yale Lawrence at a tribe at Harvard.
00:33:24 [Speaker Changed] Yeah, exactly. And so we write this article in the Yale Law Journal, we erase it to print saying what’s going on is unconstitutional. Nobody reads the article, my mom, maybe my mom read it, but you know, I don’t know. So then I said to myself, you know, you’ve got this piece of paper, Neil, a law degree, you could actually sue the president. And that’s what I did.
00:33:45 [Speaker Changed] Well you needed the plaintiff though, don’t
00:33:46 [Speaker Changed] You? Exactly. So that was the hard question because a bunch of different interest groups had sued on Guantanamo, but they didn’t have standing, they had no reason. And so I had a friend very high up at the Pentagon who got me the email address of a Pentagon lawyer who was representing the detainees. And I basically got a letter snuck to Guantanamo and it wound up in the hands of Osama bin Laden’s driver. And, and that became my client. And so I go from being a theoretical law professor to like a real, like hard-nosed litigator all in the span of a few months I filed the case, nobody thinks we’re gonna win. I have no, how far are
00:34:27 [Speaker Changed] You from law school now? You
00:34:28 [Speaker Changed] I’m like six years out. Yeah, so
00:34:30 [Speaker Changed] Still relatively green.
00:34:31 [Speaker Changed] Yeah, very green. And never filed a lawsuit, you know, and so, and I, by the way, I don’t have any help except four law students who were helping me. I tried with law firms and initially I couldn’t get them. But then ultimately Perkins Coe, a Seattle firm decided to help me and that was phenomenal. So we filed this thing, nobody thinks we’re gonna win and we win it in the trial court. We lose it in the court of appeals with a guy named John Roberts on the de sit panel. Three days later he’s nominated to the Supreme Court and then to the Chief justice ship. So I have to ask the Supreme Court to hear the Guantanamo case. It’s the most important case their new Chief Justice has ever decided. And I’m gonna say, I’m trying to tell the Supreme Court the chief justice is wrong about this.
00:35:16 Nobody thinks we’re gonna win. It’s my first Supreme Court argument. I’m arguing against President Bush’s legendary solicitor general, it’s his 35th argument. I work my tail off and we win and then my life changes and then companies wanna hire me. And I meet a young senator named Barack Obama who heard me interviewed on a interview just like this one. And he calls me into the Senate and says, you know, ask me to advise him on some things on Guantanamo. And tells me he’s thinking of running for president and, and then started working with him. And then my life changes massively.
00:35:49 [Speaker Changed] Wow. That, that’s amazing. You know, I want to talk about a couple of the other cases that you argued. One was Moore versus Harper, which former judge Michael Ludic called the most important case for American democracy ever. Tell us about that case.
00:36:08 [Speaker Changed] Yeah, so that’s a pretty recent one. I argued it I think about three years ago and it involved something called the independent state legislature theory, which at that point was the greatest threat to democracy. I think when, when Judge Ludwig was writing those remarks, we’ve now had some things which you know, are arguably worse. But it was a significant one because if you think back to the 2020 election, one of the things that that President Trump tried to do then was to say that state legislatures can control elections and you can even throw out the popular vote and just have state legislatures decide where the electoral votes will go to who, which candidate. And this became part of the RNCs playbook. And they invested heavily in state legislatures to try and develop, excuse me, this theory. So we challenge that. Again, this is one in which nobody thought we could win because if, if the Republicans won, they would entrench control over presidential elections for decades probably.
00:37:12 And a lot of people think, oh this Supreme Court, they’re appointed by Republicans, they’re very conservative, they’re just going to do, do the Republican party’s bidding. And I looked at it and I said, I don’t think that’s right. I mean this is a court that does have the fidelity to the original understanding of the Constitution. And I thought if we could make the argument in that way, and this is what my scholarship is all about, the original understanding of the constitution, I said I thought we could win. And so that’s what I developed as the strategy. And indeed I knew that Justice Thomas Clarence Thomas would ask the first question at oral argument that’s been happening now for the last few years.
00:37:50 [Speaker Changed] Ju just outta habit or prior? No. Like how does that come
00:37:53 [Speaker Changed] Up? Well, he’s one of the more senior justices and during CVID when we had to argue cases on speaker phones and we couldn’t see each other, it went in order of seniority. And so Justice Thomas was right at the top after COVID. That’s tradition continued in what Justice Thomas would ask the first question. And so I’d been thinking, how do I use that knowledge to my advantage? Justice Thomas was gonna ask the first question. And what I did was I said to myself, okay, I can develop a set play Justice Thomas is gonna ask me a question, doesn’t matter what the question is. I’m then gonna say, and this is what I do. Justice Thomas asked me a question at the argument, I don’t remember what the question was, I answer it and then I say, justice Thomas, may I say, in nearly three decades of arguing before you, I’ve been waiting for this case because it speaks to your method of constitutional interpretation, the original understanding, and here are the four things you need to know about Moore versus Harper and the original understanding of the Constitution. And I get to talk about Madison and Hamilton and Jefferson and so on. And it totally changes the dynamic in the courtroom. And and sure enough, we win six to three this case and the Republican theory is thrown out. I didn’t win Justice Thomas’s vote, but I won a bunch of others.
00:39:07 [Speaker Changed] Huh. That that’s amazing. Let’s, let’s quickly talk about the Voting Rights Act that you successfully defended. Instead of trying to overturn it, tell us how different it is to be playing defense or is it not you’re just arguing constitutional law and this is the outcome that should come about.
00:39:27 [Speaker Changed] It is different, but I would say even back then I was felt like I was playing defense. So this is a case I argued in maybe 2010, the Voting Rights Act been passed in 1965. It literally has the blood of Patriots on it. It is what Selma and the Bridge Pates Bridge is all about. And so, you know, in the case, basically it was right after President Obama had been elected and Southern states said, look, we don’t need the Voting Rights Act anymore. Look you have an African American president, like that’s proof that we don’t need it. And I stood up in court and said, no, we do need it. And it’s like, you know, the very fact that we’ve been able to have an African American president isn’t alone enough to, to say there isn’t discrimination in voting, particularly in particular areas. You know, even if the overall national result is one thing.
00:40:19 And the Supreme Court at that point accepted that argument in four years later. However, in a case called Shelby County, they reversed that position and struck down that part of the Voting Rights Act. And now there’s only one part of the Voting Rights Act that remains Section two. And the Supreme Court’s agreed to hear a case to challenge that this fall. And so we very well may have a world in which there is no Voting Rights Act left whatsoever, which is a very dangerous thing. And yes, I do think the court has become more conservative over my lifetime. I mean the court has always been a point majority Republican appointees since thing
00:40:59 [Speaker Changed] Isn’t so this isn’t just partisanship, this is a ideological tilt, not necessarily party tilts.
00:41:05 [Speaker Changed] Yeah. So I would say, you know, that the presidents now of both parties are sending to the Supreme Court more sure things that you know, in which the track record is really known. You know, the Republicans had this mantra, no more suitors because David Suitor nominated by Republican President Bush upheld things like abortion rights and so on. And the Democrats I think have had their own version of this for some time as well. And so we get, we don’t tend to get justices without very defined positions anymore. Like when I started arguing, justice Kennedy was on the court and you could see Barry every time you argued he was struggling with which is the right view, which is the right view of the law. And he is very smart man. It wasn’t that he wasn’t smart, when I say struggling, it’s not that he was struggling intellectually, they
00:41:56 [Speaker Changed] Were pretty even handed arguments on both sides. Yeah. And he
00:41:58 [Speaker Changed] Really took the argument so seriously without caricaturing him and just tried to make the right decision. And certainly that still happens today. I don’t mean to over claim it, but I would say in particularly some of the big cases, they’re coming in a bit more with their minds made up than than when I first started.
00:42:15 [Speaker Changed] Hmm. Really interesting. Coming up, we continue our conversation with appellate litigator Neil Al, talking about the tariff litigation winding its way through the courts today. I’m Barry Riol, you’re listening to Masters in Business on Bloomberg Radio. I’m Barry Ritholtz. You are listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Neil Al. He is the former solicitor general under President Obama. He is an appellate attorney who’s argued in front of the Supreme Court pretty much more than any living or at least any active attorney 52 times, something like
00:42:56 [Speaker Changed] That. There’s some more, there are people who have more, but, but I’m, I’m doing okay. You do,
00:43:00 [Speaker Changed] You’re doing okay. I, I want to talk about the VOS Trump tariff litigation that as we’re recording this right before Labor Day continues to perplex me, how little coverage this has gotten from media and, and not just political media, but financial and markets and economics, media. ’cause this case has enormous potential to impact the broader economy. So first, let’s start with VOS elections and other plaintiffs. April 14th after Liberation Day, sued the president saying, you don’t have the authority to issue tariffs on your own without meaning all these checklists, which you failed to do. How’d you get involved in this case? Tell us a little bit about what makes this case different than other challenges to presidential authority.
00:44:00 [Speaker Changed] So right after President Trump took office and started talking about this tariff position, I was reminded of the Guantanamo case I just described to you earlier because it’s the exact same problem, which is, look, a president had made, motivated by any number of good reasons, has a policy that he wants to implement. And instead of going to Congress, he just does it on his own with the stroke of his pen. And our founders thought that a very dangerous proposition, particularly in core areas like tariffs because you know, every, you know King George, of course, you know, every dictator, every every leader would like the power to tariff, to tax the people in any way they see fit without limitation. And what our founder said is, no Article one, section eight, they gave the power to tariff expressly to the president in a similar way to, they gave the, gave the power to Congress and in the same way as they did over matters of military justice.
00:45:01 [Speaker Changed] Let me ask you a question about Article one, section eight, because it talks about levies duties and taxes, but it doesn’t specifically say tariffs. Does the nomenclature matter or are they all the same thing essentially?
00:45:13 [Speaker Changed] No, I mean even, even the, the Trump administration was just made some bizarre legal arguments on this case. Even they’re not making that argument. A duty is definitely understood as a tariff and the original understanding very clear on that point.
00:45:26 [Speaker Changed] And Article one, section eight says that authority lies exclusively with Congress. Exactly. So, so that’s the initial claim. The, I’m assuming the president is saying, well I was given authority by Congress either through the A EPA Act, which was 1977 or the Trade Act of 1974. How do you see these other legislations modifying Yeah, the Constitution.
00:45:54 [Speaker Changed] So the government is certainly, so the Trump administration is trying to say that in 1977, Congress passed this International Economic Emergency Act, which gave the power to tariff. There’s only one problem with that. The law doesn’t say anything about tariffs in it in 1977. And there’s nothing in the, you know, history of the law to say. So no president for 50 years has ever thought that it includes the power to tariff. And then President Trump’s lawyers come along and say, ah, here that’s how we’re gonna announce these massive tariffs. And I just think our constitution demands more from the Congress than that simple thing. I mean, Congress can certainly tomorrow easily authorize all of President Trump’s tariffs, who would, you know, they could just do it with an up or down vote. The fact that they haven’t, the fact that the President is scared to even ask, I think tells you all you need to know about this.
00:46:48 [Speaker Changed] Didn’t he ask in his first term?
00:46:50 [Speaker Changed] In his first term, he asked and it was rejected by the Congress.
00:46:53 [Speaker Changed] So it seems kind of odd to say, please gimme the authority to tariff. No, I can’t. Okay, now I’m not even gonna ask. Yeah, this is like a, a, a teenage kid who sneaks out after curfew.
00:47:04 [Speaker Changed] Right? It’s, it’s, I mean a different way of putting the point is look, even Donald Trump didn’t believe his own I EPA argument because he went to Congress back the first time around and lost. And so then he comes up with his backup plan, which is, oh, I have the power anyway, then I have no idea what he was doing in the first term by going and asking Congress for this power if he had it in the first place. And it’s such a dangerous thing because you know, if this president does it for tariffs because he sees trade imbalances, another president, and this is how I started my oral argument to the federal circuit, another president the, to the court of appeals, another president could say, you know, climate’s a real emergency and I am going to impose a hundred percent tariffs or a thousand percent tariffs on any goods from an oil producing country. You know, that whole thing is something that Congress really needs to be deciding not the president on hiss own.
00:47:59 [Speaker Changed] So before we get to the appellate litigation, let’s start with the trial litigation. You’re representing a group of small businesses that are all saying tariffs are gonna hurt their business. Tell us what the, this was the court of trade, the International Court of Trade in dc. Tell us a little bit about that litigation. How did that proceed? Yeah,
00:48:19 [Speaker Changed] And just to be clear, I wasn’t involved at that stage. I mean this happens a lot with me. As someone brings the case in the trial court, they win or lose and then they want to fire power for the appeal stage in the Supreme Court. So that’s what happened here.
00:48:33 [Speaker Changed] And so they won at the trial level and then there was a stay on the enforcement at the trial level pending appeal. Right. How so that’s where you get involved in the case. How did this go up to the DC Court of Appeals so rapidly and why was it a full on bank all 11 justices hearing the case at once? Yeah,
00:48:54 [Speaker Changed] So what you have is you have a trial court decision from the court of international trade that says President tra trump’s tariffs are illegal. The court then pauses that ruling so that it could be decided by the appeals court and perhaps the US Supreme Court. And at that point I get involved, the Federal Court of Appeals says on their own, this case is so important that we’re gonna have all 11 of our judges here, the case, not just three judges, which is normally the rule court
00:49:22 [Speaker Changed] Court of appeal. How often do you get a full on bank hearing like that?
00:49:25 [Speaker Changed] Very rarely. I mean the federal circuit, which is this court of appeals maybe once a year, maybe once every couple years. So it’s a very rare thing and I think it does demonstrate the gravity of this. And to circle back to something at the start that you talked about, about the kind of degree of attention around this case, I guess I wanna push back a little ’cause I do think there’s been a lot of media attention around the case, a lot of jurisprudential attention around the case, but perhaps most important, a lot of business community interest. I mean, I think every major hedge fund called me while this case was pending in the trial court to ask for my views and they wanted to make financial decisions on the basis of it. I obviously can’t answer those questions in quite the same way now that I’m involved in the case. But I do think that for the markets, this is a case of enormous, of enormous significance and what happens at the Court of appeals and what perhaps happens should the case go to the Supreme Court is something that a lot of people are thinking about.
00:50:23 [Speaker Changed] So let’s, let’s walk before we run. So you argue the case on bank in front of the entire, all 11 justices of the DC Court of Appeals. Tell us what that hearing was like, how, how did it go?
00:50:37 [Speaker Changed] Yeah, so I mean I’m obviously constrained. It’s a pending case, so I wanna just stick to the public record. I’m not gonna try and litigate the case on your podcast or anything. I love your podcast, but, but I have to be very mindful of those kinds of things. But you know, in a big case like this, I think you’re always looking, I’m always looking to try and make sure the judges understand the implications of the government’s argument because anything can look reasonable when a president does it in the, in, you know, for the immediate situation. But the question in constitutional law is, if the president has this power here, what’s to stop him from doing the next thing and the next thing and the next
00:51:19 [Speaker Changed] Thing. It’s a very slippery slope. Yeah,
00:51:20 [Speaker Changed] Exactly. And that’s something our founders, the whole architecture of our government and Madison really talks about this in federal S 10 51. The whole architecture of our government is to try and prevent that slippery slope through all sorts of different breaks. And the, obviously the most important break to our founders was the role of the Congress and that the Congress has to affirmatively authorize things before a president can do them.
00:51:44 [Speaker Changed] So if the president can levy tariffs, taxes, duties on his own without Congress, what can he do?
00:51:53 [Speaker Changed] Exactly. And so, you know, you asked me how did the argument go? I felt like the judges were circling in on that precise question, the one you just asked me. And you know, it’s available for anyone to listen to. It’s
00:52:07 [Speaker Changed] On YouTube, it’s available.
00:52:08 [Speaker Changed] Yep, exactly. So you know, listeners can decide for themselves, but I do think the government, you know, was, was on the defense in response to those questions. And you know, I, you know, I have some sympathy for that. I was the top lawyer for the federal government for a while and you know, sometimes governments, you know, have positions that are tough to defend. This one I felt was particularly tough to defend.
00:52:33 [Speaker Changed] So what is, given what we’ve talked about with Article one, section eight and I epa, what on earth was the government’s case defending the tariff action?
00:52:44 [Speaker Changed] Most of the government’s case was a like a F of complete, which was,
00:52:48 [Speaker Changed] Oh, it’s already done.
00:52:49 [Speaker Changed] The president’s done it, it’s had all these successes. If you undo it, it’s going and declare it illegal, then it’s gonna wreck the economy.
00:52:57 [Speaker Changed] I am not aware of many having gone to law school and passed the bar. I don’t recall a lot of constitutional cases where the judges shrugged and said, well if you did it already, who are we to undo that?
00:53:10 [Speaker Changed] Exactly. That’s,
00:53:12 [Speaker Changed] It seems like a kind of bizarre argument to make
00:53:15 [Speaker Changed] It. It is, but it is one that the governments have made, prior governments have made it, president Truman made it when he sees the steel mills in 1952. And that went up to the Supreme Court Solicitor General made a version of this argument. And of course there we were in a war and we needed the steel. And so the Solicitor General said to the Supreme Court, look, you will dra gravely undermine our war fighting powers in the midst of a war if you reverse the president’s decision to seize the steel mills. Supreme Court said that’s not a good enough reason, really in our constitutional system. They say it’s Congress that makes the laws. And again, similar architecture to the Guantanamo argument. Similar architecture here in the tariffs case.
00:53:56 [Speaker Changed] Huh? That, that’s really fascinating. So the government subsequently did a filing pretty quickly after the hearing asking for a stay if they lose pending Supreme Court review, that seems kind of unusual. It’s almost as if, hey, we didn’t do a great job and we think we’re gonna lose, but we don’t want you to overturn this. How often does that happen? This quickly after a, an appeal is argued,
00:54:25 [Speaker Changed] I mean it was an extraordinary letter. I don’t really
wanna say more than that. People can listen to, people can read the letter for
themselves. It was filed in the court. It’s a two page letter and then we filed a
quick response to it. But it is, it is an extraordinary letter.
00:54:39 [Speaker Changed] So typically we get a, this was argued in July, 2025. I dunno, it could take six months before we get a decision. Typically, my assumption is a full on bank hearing, recognizing this is a really important case. You tend to get a decision faster than you would otherwise. I’m assuming that this can drop sometime in September, October, but this isn’t a February, 2026,
00:55:06 [Speaker Changed] I think nobody wants it to be something that’s gonna go long. And courts of appeals generally do take a while for decisions. The average time is about six months in the federal system here. I think the judges do want to try and decide this quickly. That was indicated to us by the fact that they gave us very little time to write our briefs. You know, they wanted us to go straight to argument. And so
00:55:29 [Speaker Changed] Really, how, what’s that timeline normally like to prep? I
00:55:32 [Speaker Changed] Think it, it was truncated by about half the time. Huh. And, and then oral arguments set for right away, right after the briefs came in. So,
00:55:40 [Speaker Changed] So no fooling around we’re, we’re fast tracking this. Exactly. This isn’t a Christmas decision. We’re gonna, we’re gonna get this out exactly a little after Labor Day.
00:55:48 [Speaker Changed] And I think the court did exactly the right and responsible thing there, which is us as lawyers, we can get the briefs done, we can get prepared for argument. So, you know, so do it more quickly because there are 11 judges and they do have to reach some sort of majority view. It is gonna take some time in which, you know, 11 people to decide anything takes time. Particularly something with this gravity and weight.
00:56:09 [Speaker Changed] Hmm. Quite fascinating coming up, we continue our conversation with Neil Cardial, who is the plaintiff’s attorney on the appeal for the VOS selections versus Trump, which is seeking to overturn all of the tariffs, discussing where the case can go from here. I’m Barry Ritholtz, you’re listening to Masters in Business on Bloomberg Radio. I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio. My extra special guest today is Litigation appellate attorney Neil Cardial. He has a tremendous cv, former solicitor general, dozens and dozens of cases argued in front of the Supreme Court. And the most recent argument he did was the VOS selections versus Trump arguing that all of these tariffs are illegal. So, so let’s pick up where we left off the DC Court of appeals, agree to hear the case. They expedite this. You don’t have a lot of time to prep for the, the moving papers. You don’t have a lot of time to prep for the oral argument. What is that argument like when you’re in front of the court? How long does it go for? I know you’ve done this a million times. You still get those butterflies in your stomach before you get up there.
00:57:25 [Speaker Changed] Always get the butterflies and you know, it helps me be a better lawyer. And the minute that I don’t have those butterflies, I’m gonna go do something else. John Roberts told me that I used to run his practice at his law firm practice, and he said, you know, every time I go up there, I got, I got nervous really? And like, and he was an extraordinary advocate. And so I’ve, I’ve come to actually appreciate the butterflies as opposed to trying to just push them away. My practice schedule is the same for any kind of big case, which is I take notes on the briefs that have been filed, and then I relentlessly, relentlessly practice the argument in front of people, both new to the case, like the judges will be, and people who are experts on the case, and they are throwing questions at me one after another for hours.
00:58:14 And I do this sometimes, you know, as many as 6, 8, 10 times in the tariffs case. I did it eight times, practicing the argument in front of all these people. And I then go and I listen to the arguments, these practice sessions on MP three, I put it on, you know, something that I can put on my, on my iPhone and then I’ll run to it or, or something like that. And so I’m just thinking to myself, A, can I answer the question better? B, can I answer it more quickly? C, can I answer the question in a way that doesn’t invite a follow up question that I really don’t want to ask? And then d the most dark arts part of it, can I answer the question in a way that leads them to ask the next question? Which is one I do want.
00:59:05 [Speaker Changed] So there’s a lot of tactical thinking and strategy beyond just legal knowledge and rehearsal.
00:59:12 [Speaker Changed] A hundred percent. Like, I mean, you know, in a big case, yes, you gotta know the law, you gotta know the history. You gotta have all of the, you know, finer points, you know, memorized in your
00:59:23 [Speaker Changed] Head head. That’s just table stakes though,
00:59:24 [Speaker Changed] Right? But at the end of it, in the big cases, what really matters is can you pivot the conversation in the way you want? Can you show maximum credibility with the court? Can you really be a true listener to the questions and not answer the question that you want asked? Because they may be asking you a different one. And you’ve gotta answer that one. And so it is a really specialized skill, which is why, you know, I tend to be brought in for these cases, which like, you know, I don’t know how to do a trial. In fact, I was special prosecutor in the George Floyd murder and, but I handed handled all the appeal stuff because I, I mean, you know, I have no idea how to cross-examine a witness or something. And so, you know, I, I do one thing, hopefully I do it kind of well. And, but the practice sessions are really, I think the secret sauce
01:00:15 [Speaker Changed] Kind of, well, I do it kind of well, thanks. How long did the oral arguments last? How?
01:00:21 [Speaker Changed] I think they were a couple hours long.
01:00:22 [Speaker Changed] That’s what it looked like when I saw it on YouTube. And I’m like, I don’t know how much of this, ’cause I listened to a good chunk of it and kept starting and stopping and I’m like, this feels like typical appellate arguments are not hours long. Right? You got like 15, 20 minutes. It
01:00:38 [Speaker Changed] Feels like it was separate for 23 minutes, I think for me. Okay. And I, I am pretty sure I probably went for an hour or something like that. Wow. Yeah.
01:00:44 [Speaker Changed] And how did opposing counsel, how much time did they use? And
01:00:48 [Speaker Changed] I think they used a fair amount of time as well. I think the court really did wanna try and ask a, a lot of the hard questions to both sides. And, and so yeah, so I think it, it did go long.
01:00:59 [Speaker Changed] So the DC Court of Appeals recognizes how significant this case is. They expedite it, it’s a full on bank, all 11 justices hear it. Where does it go from here? I was trying to figure out what options. So I’m gonna assume for argument’s sake that the plaintiff is successful in this case, and they affirm the lower court’s ruling against the president tariffs are Congress’s venue, not the president’s. Their, their, their responsibility. What happens from here? What can the Supreme Court do? They could say that’s fine, let it stand as far as i, I know they could remand the case for further fact finding to the trial judge and say, we wanna see more specific things or, or they can take it up on a, on a full hearing. What am I missing? What am I forgetting from law
01:01:53 [Speaker Changed] School? No, I think that’s exactly right. So if we win, you know, the government will try and take the case to the Supreme Court. They’ve already said they would do that. And we hope the Supreme Court at that point wouldn’t hear the case. I mean, I’m privileged to represent these plaintiffs, they’re small businesses. VOS selections is a small wine company. It’s been around for a while. And if they’re saying, and they filed briefs in the Supreme Court in the Court of Appeals that say if we lose this case, our business may go under and other businesses like ours may go under. And so, you know, we think from the perspective of small businesses in particular, it’s really important that this issue gets settled and settled quickly. And if the Court of appeals says, as I hope they will, that President Trump’s tariffs are unconstitutional, we hope that’s the end of it.
01:02:40 It might not be, of course Supreme Court may decide to hear the case. Conversely, if the government wins in the Court of Appeals and says these tariffs are okay, then we would presumably go to the Supreme Court and say, no, they’re not. And then the ask the Supreme Court to hearing, and then there is, as you say, a third option in which the Court of appeals might say, Hey, you know, we think that this needs to go back to the trial court for further fact finding on something or the other. You know, I think that’s in many ways the worst of every world because everyone needs certainty around this, particularly the business community. And so, you know, you know, there’s definitely been floated as a possibility, but it’s one that I think wouldn’t be attractive to the government.
01:03:27 [Speaker Changed] And the facts in question are pretty clear, here’s what the president did, here’s what the litigation has showed, and here’s the, the legislation and the Constitution. The specific facts don’t seem to matter that much other than what is pretty widely understood.
01:03:43 [Speaker Changed] Yes, that’s correct. That’s exactly your argument.
01:03:46 [Speaker Changed] So, so let’s talk about remedies. Hypothetically, you win at the appellate level, there’s been a stay for the prior victory at the district court level, at the international court of trade level. What sort of remedies do small businesses get? Can the tariffs be thrown out? Can companies that have paid tariffs, can they get refunds? How, how does this work?
01:04:12 [Speaker Changed] Right. So I think right now all we have asked for in our case is, is for the tariffs to be declared unconstitutional, illegal, and void. There is a question, as you say about comp, about companies, individuals that have paid tariffs. Can they get a refund on that from the government? That’s not something that’s been briefed yet, or argued. I think it is kicking around as an issue when President Trump issued some tariffs that were declared illegal before there were refund actions that were filed. And I think those refund actions are still pending years later. Really? In the courts? Yes. Wow. So, you know, it’s a long process, that refund process to the extent it’s available. We have just not gotten into that
01:04:56 [Speaker Changed] At this point. And, and I look at tariffs as a vat tax on consumers. I’m gonna assume consumers are just, that money’s gone. They’ll never be able to see that back.
01:05:04 [Speaker Changed] Yeah. I don’t know if that, you know, I think that may be the case. I think you’re right to characterize tariffs as a tax. I think you’re a hundred percent right. That’s what we’re talking about. We’re talking about the price because of President Trump’s tariffs, the price of everything you’re hurting on Amazon or at the grocery store, whatever, you know, increasing the cost to you, the American consumer. Indeed, the tax foundation, which is a nonpartisan group, has said that this is the largest tax increase on American consumers since Bill Clinton in 1993.
01:05:36 [Speaker Changed] That’s a big tax increase, isn’t it? Yeah. So, so let’s talk about, I know you don’t wanna speculate about the Supreme Court. This court seems to have been increasingly allowing presidential authority to expand at, at what point is it a bridge too far? This is essentially we are gonna give the president the authority to tax, which is Congress’s responsibility. How do you think about how the Supreme Court is gonna contextualize this? Is there a narrow keyhole that they can sort of, you know, thread the needle and avoid the constitutional argument? I’m, I I, I’m trying not to put words in your mouth and, and think about what are the possible scenarios we could go down?
01:06:27 [Speaker Changed] Yeah. So I think, you know, the Supreme Court has probably the same three options that we talked about earlier for the Court of Appeals, declare the tariffs illegal and unconstitutional, declare the tariffs constitutional and legal, or send it back to the trial court for some fact finding. I do think that there’s a deep concern that the, this president is asserting powers in very, very muscular ways. And some of those are legitimate and others are not. This is one that I think is pretty easy to characterize as falling on the latter side of that line. Others are more difficult and, you know, and so I think there’s a conversation at the court about that question, but I think they’re gonna approach this case as they do any on its own individual facts. And the facts are, I think here that the President hasn’t done what the Constitution requires, which is to have him go to Congress and get the authority for the things that he says he claims he needs so desperately.
01:07:29 [Speaker Changed] So the middle E in a EPA is emergency. Is there an argument to be had that, hey, we’re in the middle of an emergency. Although, you know, some of the things that kind of surprised me about the tariffs, he negotiated the president negotiated the North American trade Group trade laws, and now threw that out in Tariffed, and we have a free trade agreement with South Korea and suddenly we’re tariff them. How, how is it an emergency if you’re taring every country in the world, including those that do not have tariffs on, on our goods? It’s
01:08:08 [Speaker Changed] A hundred percent right. And I would point out that the language of this 1977 law that President Trump is, is relying on a EPA, it doesn’t just say emergency, it says it must also be an unusual and extraordinary threat. And yet the president’s executive order imposing these tariffs has said trade deficits have been a persistent feature of the American economy for the last 50 years. And so he basically pled himself outta court because his own executive order says these trade deficits are not unusual and extraordinary. They’re commonplace and dere in the American economy. So that was, I think, a big for portion of my oral argument before the court. And, you know, I suspect that will, you know, get a bunch of attention in whatever decision the court of appeals will make. So I think, look, we want a circumstance, and our founders wanted a, wanted a constitutional structure in which if there is a true emergency, presidents get leeway.
01:09:09 [Speaker Changed] You’re anticipating my next question, which is the Supreme Court doesn’t wanna tie the President’s hand in cases of true emergencies. I’m re-hear your argument. This should have nothing to do with that. There’s no emergency. Exactly.
01:09:25 [Speaker Changed] You’ve got time to go to Congress. Like think back to President Lincoln in the Civil War. He, you know, orders the blockade of the South. He suspends the writ of habeas corpus. And, and yet he says, I’m gonna call a special session of Congress on July 4th to get people back to vote and say, did I do, do you ratify what I did? I had to do it in an emergency. And of course then you didn’t have the
01:09:50 [Speaker Changed] Same middle of Civil war.
01:09:51 [Speaker Changed] Middle of civil war, no telecoms, no instant email or anything like that, you know, so he had to take certain actions in order to protect the American Republic. And you know, certainly I, and the small businesses I’m privileged to represent, we’re not saying in some true emergency in which Congress can’t act, the President can’t fill the void. Of course he can. This is the opposite of that. This is one in which Congress is operating normally. The trade deficits have been going on for 50 years. No president has ever sought this kind of po sweeping power. And yet he comes along and says, I Donald Trump, get this power. That’s a very dangerous thing, not just because for some people who are concerned about President Trump, but if you’re concerned about President Ram, Donny or whomever in the future, you don’t want presidents to have that kind of sweeping power on their own.
01:10:37 [Speaker Changed] What a perfect place to leave it. Thank you, Neil, for being so generous with your time. We have been speaking with Neil Cardial. He is the appellate litigator for VOS selections versus Trump, which seeks to declare the president’s tariffs not only null and void, but unconstitutional. If you enjoy this conversation, well check out any of the other 500 we’ve done over the past 12 years. You can find those at iTunes, Spotify, Bloomberg, YouTube, wherever you find your favorite podcasts. I would be remiss if I did not thank the crack team that helps us put these conversations together each week. Alexis Noriega is my producer, Sage Bauman is the head of podcasts at Bloomberg. Sean Russo is my researcher. I’m Barry Riol. You’ve been listening to Masters in Business on Bloomberg Radio.
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