We heard CEOs rip into Trump’s tariffs behind the scenes and the Supreme Court just vindicated them
· Fortune
Today’s decision by the U.S. Supreme Court striking down most of President Trump’s sweeping import tariffs under the International Emergency Economic Powers Act (IEEPA) is not only the right decision, it is a profound economic relief for American businesses and consumers alike.
In a 6-3 decision, the Court made clear what many CEOs have been saying for months, publicly and privately: the tariff gambit was not only unlawful, but it has been counterproductive, as well as harmful to American businesses and the economy.
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Today’s ruling fortifies what CEOs have been telling us about tariffs all along
CEOs have been sounding the alarm over the last year, all but begging to be liberated from liberation day. Top businesses nearly universally saw those tariffs as bad for business, no matter what Howard Lutnick and Peter Navarro said as spin.
At our last Yale CEO Caucus in Washington DC, 75% of CEOs told us that they believe the IEEPA tariffs are illegal. Meanwhile, two-thirds of the top CEOs surveyed at our event told us that U.S. tariffs have been harmful to their businesses, with 80% of CEOs telling us that at least some of the cost of tariffs have been passed onto consumers.
As one major manufacturing CEO explained to us at our last Yale CEO Caucus, “If the U.S. government wants to help protect certain industries, they need to help those industries be successful. It is not just putting a bunch of tariffs in place and assuming those industries are going to get moved to the U.S.” This CEO urged for “incentives” to be built into the system, because consumers want products to be low-cost and certain items like power tools, hand tools, clothing, sneakers should be made elsewhere. “Does it really make sense to be manufacturing all that in the United States? I do not believe it does. I believe there are certain industries where it does make sense … but it is not realistic to expect every industry in the world to be manufacturing products in the U.S. for the U.S.”
The warnings that these tariffs were not penalties paid by foreign adversaries, but rather punitive taxes paid directly by American businesses and consumers could not be more clear, with the clear message that these policies were fundamentally bad for the economy. Indeed, at our prior Yale CEO Caucus, attendees were asked if they were planning to invest more in US manufacturing and infrastructure – and 62% said no.
Despite today’s ruling – uncertainty will continue thanks to Trump’s continued tariff threats
Unfortunately, despite today’s Supreme Court ruling, businesses are not out of the woods of Trump’s tariff tantrums, as we enter into a new era of fresh uncertainty. We reveal in our new book, Trump’s Ten Commandments, published by Worth Books and distributed by Simon & Schuster, that Trump’s instincts are often surprisingly predictable, as he tends to react in predictably consistent ways.
As we warn in Trump’s Ten Commandments, there are few things that Trump hates more than being humiliated and being told publicly that he cannot do something. His fundamental instinct is to double down and lash out when that happens, thrashing about, almost like a wounded animal in a corner.
There is no question that the Supreme Court’s ruling serves as a highly public and humiliating rebuke to Trump; and indeed, in his speech immediately after today’s ruling, Trump was already signaling that he will double down, threatening a flurry of new tariffs under Section 122 of the Trade Act of 1974 to impose a temporary 10% global tariff while his administration pursues other, more permanent trade authorities, as well as new section 301 investigations which usually precede the imposition of new tariffs. That gambit may be legal, but it perpetuates the same damaging uncertainty that paralyzed investment decisions over the past year.
The effect of this uncertainty will be far more damaging in the long run than moving interest rates a fraction of a point, as Trump seeks to jawbone the Fed into doing. Most responsible CEOs cannot and will not commit capital to new plants or equipment if they can’t forecast costs, with tariffs fluctuating by the day.
Furthermore, as we warn in Chapter 6 of Trump’s Ten Commandments, another one of Trump’s most predictable responses is to try to drown out bad news with diversions, driving news cycles of his own creation to divert attention away. Today’s tariffs setback today makes it more likely that Trump will likely seek to engage in some sort of military action on Iran in the very near future, with Trump eager to reassert control and divert public attention away from bad news he doesn’t want the public to linger on. This would follow a similar pattern of how previous external foreign policy flashpoints of Trump’s own creation, such as saber-rattling over Greenland and the seizure of Nicolas Maduro in Venezuela, were timed, perhaps not coincidentally, to divert attention away from domestic policy setbacks over ICE in Minnesota as well as uproar over the Epstein files. As we pointed out previously when Trump posted a racist attack on the Obamas on Truth Social; sometimes, Trump will even seek to shoot himself in the foot to drown out other bad news.
The Supreme Court itself is not blameless for the lingering uncertainty. Justice Brett Kavanaugh’s dissenting opinion is anchored in the complications over refunding the tariff revenues collected over the last 10 months. That is at least in part the Supreme Court’s own fault. The original IEEPA tariffs lawsuit was filed nearly 10 months ago, and the delay in ruling was entirely their own decision. The Supreme Court has issued approximately 25 shadow docket decisions over that time for emergency action on issues of far lesser consequence. Many analysts expected the Court to rule on tariffs around Thanksgiving or Christmas, but instead they apparently thought it was more important to rule in favor of Elon Musk’s DOGE firings, even though DOGE is now largely shuttered, or their ruling allowing firings of transgender military personnel. In the Court’s eyes, those were apparently far more urgent immediate national priorities than tariffs over these last 10 months.
Today’s Supreme Court decision vindicates the wise warnings of CEOs, who have been sounding the alarm bells publicly and privately for months. But far from being liberated from Liberation Day, sadly, Trump’s predictable response only exacerbates the uncertainty and chaos from his tariffs, with a continuing, damaging effect on business confidence and investment.
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