SCOTUS Nixes Tariffs: Stir of emotions evident across the state
For the past 10 months, the free movement of commerce across the Rio Grande, going back to the early 1990s, has felt more like a stutter, thanks to the president’s “Liberation Day” tariffs, which struck last April.
Tariffs up, tariffs down, no tariffs, new tariffs, special tariffs, who can keep up, customs brokers ask, as they reach for another Diazepam.
On Friday, the U.S. Supreme Court declared the president’s tariffs unconstitutional, essentially ruling that tariffs are “very clearly… a branch of the taxing power” reserved for Congress under Article I of the Constitution.
For their troubles, President Trump has labeled the three GOP-appointed justices (Chief Justice John Roberts, Neil Gorsuch, and Amy Coney Barrett) who signed the majority opinion, penned by Roberts, as a lot of things, none of them good: # “An embarrassment to their families.”
# “Swayed by foreign interests.”
# “Fools and lapdogs.”
# “Politically correct.” # “Very unpatriotic and disloyal.”
Whether they were being disloyal to the president or to the U.S. Constitution, President Donald Trump wasn’t quite clear, before finding a way to also bring their loved ones into the mix: # “An embarrassment to their families.”
Just to be clear, Trump’s personal slams against the three justices is without precedent. Sure, FDR had his troubles with the nation’s highest court, and so did Jefferson and Lincoln, but saying that Chief Justice Roberts has been swayed by “foreign interests,” or that the three who voted with the three liberal justices to strike down tariffs are “fools” and “lapdogs,” is indeed unique in American history.
The Fallout
For the RGV, Hidalgo County, the landmark 6-3 decision affects a region whose economy rests — not quite entirely, but almost — on cross-border movement, the free-flow of commerce.
Following last week’s news, stakeholders weighed in:
“It’s been emails, calls, and WhatsApp messages nonstop,” says Jorge Torres, a licensed customs broker and president of McAllen-based Interlink Trade Services.
His firm operates across the major Texas gateways of Laredo, Brownsville, and Pharr. Torres spent Friday morning fielding frantic inquiries.
“The first question is always: ‘When can we stop paying?’ The second is: ‘When are we going to get refunds?’ I just have to tell them to hang tight.” (Source: Texas Tribune.)
The “money back” at stake (tariff refunds) is also a staggering sight to behold: Up to $175 billion in import taxes were collected over the past year, the burden of which largely fell on U.S. importers rather than foreign exporters. Major American companies such as Costco, Goodyear, Prada, and BYD have already filed lawsuits against the federal government to demand refunds.
In fact, the Kiel Institute for the World Economy did a trade study last year that quantified the tariff burden, concluding that 96 percent of it was borne by American importers and consumers.
“Honey, why does the big Easter bunny decoration at Walmart cost 35 percent more than it did last year?”
Tariffs Were Great?
Yet, allies of the Trump administration up in Austin warn that the win for importers could spell defeat for American producers.
“This ruling takes a hammer out of the President’s toolbox,” says Texas Agriculture Commissioner Sid Miller, who has long argued that tariffs are the only “stick” strong enough to force fair play from global competitors.
“While the critics scream, I’ll stay in the dirt fighting for our ranchers,” says Miller. “These tariffs were about making sure ‘Made in USA’ actually mean something. If we lose the ability to fight back economically, we’re just leaving our front door wide open.” (Source: TexasAgriculture. gov.)
President Trump echoed that defiance Saturday, announcing he would invoke Section 122 of the Trade Act of 1974 to impose a 15-percent global tariff replacing the struck-down levies. He dismissed immediate refunds, predicting the battle would “end up being in court for the next five years.”
Lori Mullins, president of the Houston Customs Brokers and Freight Forwarders Association, says the industry is braced for the whiplash.
“Importers are in for a bumpy ride in the coming months,” she noted, though she added that firms have grown hardened to the day-to-day uncertainty of the past year. (Source: Texas-Tribune.org.)
On the other side of the debate sits Congressman Henry Cuellar (D-Laredo) — whose district includes a western portion of the RGV — who hailed the Supreme Court decision as a restoration of the rule of law.
“Our border communities have been the collateral damage of an ego-driven trade war,” Cuellar said. “This ruling reaffirms that the president cannot simply invent taxes on working families to satisfy a political whim.” (Source: Cuellar.house. gov.)
Even with the tariffs struck down, at least for the moment, sector-specific levies on steel and aluminum remain in place. The American Farm Bureau Federation notes that while it understands the goal of a level playing field, the “trade disruptions and declining prices” have created “additional hardships for farmers” already battling record-high supply costs. (Source: AFBF.)