A panel of federal judges ruled on Wednesday that many of President Trump’s tariffs were illegal, a decision that has threatened to derail his trade agenda.Victor Schwartz, the wine importer at the center of the case, explains why he decided to take on the president, and Jeanna Smialek, the Brussels bureau chief for The Times, discusses what options Mr. Trump has to save his trade war.Guest:Victor Schwartz, a small wine importer and the lead plaintiff in a lawsuit against Mr. Trump’s tariffs.Jeanna Smialek, the Brussels bureau chief for The New York Times.Background reading: The U.S. Court of International Trade said Mr. Trump had overstepped his authority in imposing his “reciprocal” tariffs globally.An appeals court spared the tariffs while it considered the challenge.From March: Wine businesses were struck with fears of disaster under the threat of huge tariffs.For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday. Photo: Doug Mills/The New York Times Unlock full access to New York Times podcasts and explore everything from politics to pop culture. Subscribe today at nytimes.com/podcasts or on Apple Podcasts and Spotify.
Chapter 1: What led to the court ruling against Trump's tariffs?
From The New York Times, I'm Rachel Abrams, and this is The Daily. In a blow that has threatened to derail President Trump's trade agenda, a federal court ruled on Wednesday that many of the president's tariffs are in fact illegal. That decision makes the future of Trump's trade war even more uncertain. Today,
Victor?
Yes, hello?
Hi, it's Rachel Abrams from The Daily. How are you?
I'm just crazy.
You're having quite the day.
It has just been nonstop. I got a call from ABC News in the middle of dinner. They wanted to come over to my place, which kind of got me nervous because I thought they were some weirdos. I grilled them a bit. I hope they're real. I said, OK, well, meet me outside my building. I'm not letting you in my house. So that was fine. They were very nice people. And then I got a call from CNN in Hong Kong.
So that was crazy. And then the phone's been ringing and everybody wants to get my comment.
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Chapter 2: How did Victor Schwartz become the lead plaintiff?
Obviously, the reason that you're getting hounded is that you were the lead plaintiff on a case that got ruled on Wednesday afternoon.
Yeah, yeah, that's right.
So the ruling basically said, you know, much of Trump's tariffs are illegal.
Correct.
Can you just bring us to the moment where you found out about the court ruling? How did you find out and how did you feel? Well...
I was literally preparing dinner. I was looking for a recipe for linguine and clams. And I walked over to the computer. You know, I'd looked at one before. And then I got an email from Sarah Albrecht, who is the head of the Liberty Justice Center, and the wonderful people who have taken our case pro bono. And they're the ones doing the heavy lifting, not me. I'm just the legal spokesmodel.
So I read that. And of course, I'm completely confused because I don't know the legalese or the summary judgments. Is that good? Bad? I don't know. I immediately got in touch with a friend of mine who's a lawyer. He explained it, that it was very good. So just kind of been off to the races.
How did you become the spokesmodel for this lawsuit?
Because I'll tell you, I'll tell you, it is also strange and backdoor. It's like unintentional. This is in March. We're at brunch and we're talking about the tariffs because that was on everyone's mind. We're having a conversation with a cousin of my wife's. And He brought up the fact that his former law professor was bringing a case against the tariffs.
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Chapter 3: What challenges do wine importers face under tariffs?
So bottom line is you import wine. That costs money. It's already cost you money. You decided to fight this.
I decided I had to step up. Yeah. I mean, it came to me in a sense. You know what I mean? I wasn't like I was looking for a law case. I want to be very clear about that.
How did you feel when you won yesterday? Because I got to point out here, you're literally going up against the president of the United States. You presumably know how much this policy means to him. And you just threw a gigantic wrench into his whole plan.
I mean, when I first read the complaint, VOS Elections Inc. versus Trump et al., I laughed like a lunatic. I mean, in a sense, this is so crazy. This is not what I signed up for when I created my company 39 years ago.
I just wanted to find interesting wines that are really delicious, find a community of like-minded people on this side of the pond, and sell them these delicious wines and have a happy life. That's all I wanted to do. and not pay high tariffs for it. I am sure there are definitely some trade issues. I'm not, like, completely anti-tariff in some way.
But the fact is, it was not necessary for our industry, and certainly not across the board.
Do you feel any certainty now about what to do with your business? Like, will this actually help the plant? No.
Like, don't count your chickens yet. I mean, I do think we're going to eventually win. We can't know. It'll probably go to the appellate court in D.C., right? That's the next step. We don't know how they will rule. Will the Supreme Court say, no, we're not going to touch it, or will they take it on? So many ifs. You can't plan on that. You can't plan on ifs.
No, we're planning on the tariffs being with us for a while. That's the sad truth of it. But we'll still enjoy the win for the time being.
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Chapter 4: What is the significance of the International Emergency Economic Powers Act?
Right. It is a law to keep track of. I think it's important to emphasize what's not affected, and that is sector-specific tariffs. So you may remember that there are 25% tariffs on steel and aluminum and on cars. Those tariffs are under a different law entirely and are not subject to this ruling.
Mm-hmm.
The tariffs that are subject to this ruling are across-the-board tariffs that have applied to a bunch of American trading partners and which were announced early in April on what President Trump called Liberation Day. Those are currently at 10%, but they were set to bounce back to higher rates that were specific by country after a 90-day pause, so in mid-July.
And they've really been sort of the center of negotiations. This is the thing that Trump is negotiating with countries across the world about.
Okay, so then the Wednesday night ruling, how does that ruling affect, if it affects, the negotiations that are active right now between the administration and these foreign trading partners?
Well, this really damages President Trump's ability to do the kind of negotiating that he tends to prefer to do and which he has very much been doing throughout this trade war. So what we've seen him do repeatedly is kind of art of the deal, unpredictable style of negotiation, where he announces really big tariffs on trading partners and then rapidly takes them off and then threatens them again.
And so it's been this sort of, you know, you get a tariff, you get a tariff. approach of trying to keep everybody on their back foot. And he's been doing that unilaterally, sort of King Trump style, not passing it through Congress, not taking the time to do some big investigation. And he's been able to do it very quickly and very nimbly because of this creative use of this law.
And now suddenly it seems like that might be off the table. Although I think it would be premature to say that this is the end of the trade war. I've been talking to a lot of people today who are very nervous about what happens next. I think the word of the day is probably chaos.
And, you know, I think there are a lot of questions about whether there's actually potentially a risk that this actually provokes the Trump administration to do something even more drastic.
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Chapter 5: What options does Trump have following the court ruling?
And it's very clear that the Trump administration is... going to really try and get this overturned in court, and it could even end up being escalated to the Supreme Court potentially. So clearly there are some legal options here. And then I think the second bucket of options is what they can do on the trade front.
And one option there is that they could use another provision in trade law to apply some tariffs up to 15% on trading partners for 150 days. And after that, they'd have to take it to Congress. But there is a period here where the Trump administration could do that without congressional approval.
And how likely is it that the president would enact that 150-day 15% tariff and then go to Congress to seek the authority to, I guess, extend it permanently?
I think people think it's possible that he'll do the 150-day version of this. I think people think it's a little less likely that he's going to try to get something through Congress because while that would put this on very solid legal footing, it also means you have to get it through Congress.
But I think that there are other tools that Trump has at his disposal that he could reach for maybe a little bit more readily that he's used before and which are really legally solid. And those are the ones that people are really worried about.
Can you explain that a little bit? What are these more legally solid options?
So there are two provisions in trade law that allow you to slap tariffs on trading partners after investigations. One is a national security investigation, and it allows you to apply tariffs to specific sectors. The other is an investigation into unfair trading practices, and it allows you to apply tariffs to a specific sector. trading partner, so an individual country, but across the board.
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Chapter 6: How did Victor celebrate the court ruling?
These are the provisions they're currently using to hit steel and aluminum and to hit cars. And so this isn't a totally novel idea, which would put tariffs on slightly stronger legal footing.
So if those options could theoretically put the administration on more solid legal footing, why not use those to begin with? Like, why even rely on this 1977 law that seems to have been relatively easily struck down, at least by this first court?
So the 1977 law gives you a lot more unilateral, immediate authority. It allows you to just kind of throw out a number and threaten another country with it. Whereas these investigations take time. You know, they take weeks, maybe months to complete. But what we've seen so far is that the Trump administration has really used a combination of the two.
And so they have a bunch of investigations, open, pending, not completed, that would potentially allow them to hit additional sectors with tariffs. And so it's entirely possible that we see more of these sector-specific tariffs and fewer across-the-board tariffs. And those could still be very painful for America's trading partners.
It feels as though there has been this pattern since President Trump took office of him levying these huge threats that end up in one way or another going away, either because a court strikes something down or a deal is negotiated or he walks something back.
And I just wonder if this ruling on Wednesday, if in any way it puts even more pressure on President Trump to show that he means business with these trade negotiations. Yeah.
Yeah, you know, this comes at this really crucial moment for the Trump administration because they had been trying to make 90 deals in 90 days and they are well short of that target. And so I think this is sort of entering the ferment at this moment where we're in this really intense period of negotiation and there's a lot of pressure on the Trump administration.
But I don't think it's a foregone conclusion that things are going to get worse from here. You know, I think we saw stocks rise on this decision because at least people in financial markets think that this could potentially de-escalate the trade war.
But I definitely heard some people voice the concern today that the Trump administration is going to feel like they need to reassert their bargaining position and that that feeling of being backed into a corner could force them to take more drastic action or could force them to speed up some of these sector-specific tariffs.
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