Reimagining American Economic Leadership |
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Dear RealEcon readers,
Another Friday, another earthquake in U.S. trade policy. After Washington, DC, had effectively shut down for the long Labor Day weekend on August 29, a federal appeals court issued a 7-4 ruling upholding an earlier Court of International Trade finding that the Trump administration’s use of emergency powers to impose tariffs on U.S. trading partners was illegal. The appeals court stayed the decision—leaving the tariffs in place—until October 14 to give the administration an opportunity to appeal to the Supreme Court.
In our top items in this edition of RealEcon, CFR Senior Fellows Brad W. Setser and Jennifer Hillman answer questions about the ruling and its implications for Trump administration trade policy, including what other legal workarounds are possible if the administration is forced to rescind the tariffs imposed to date under the International Economic Emergency Powers Act (IEEPA). And as always, we include other timely pieces on international economic policy by CFR and outside experts.
Thank you for your interest in the RealEcon Initiative. I value your feedback on this newsletter and your ideas for how the initiative can have more impact. —Matthew P. Goodman, Director of the Greenberg Center for Geoeconomic Studies and Director of the CFR RealEcon Initiative |
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| Trade Fun Fact
How many American jobs are supported by international companies investing in the United States? Answer at the bottom of the newsletter |
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After another legal setback, the next high-stakes ruling on President Donald Trump’s use of emergency powers to impose tariffs is expected to come from the Supreme Court. But the administration could use other tools to continue to exact major duties on trading partners, says Setser. See the Q&A
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If the Supreme Court ultimately strikes down Trump’s tariffs, importers could receive refunds, duty-free imports under $800 could resume, and consumer prices on certain goods could decrease, explains Hillman, as she examines the Friday court ruling. Watch the short
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Despite the Department of Justice’s argument before the Court of Appeals, Section 122 covers trade deficits; to rule otherwise would risk an expansion of the IEEPA that Congress did not intend, argue Marc L. Busch, Karl F. Landegger professor of international business diplomacy at Georgetown University’s Edmund A. Walsh School of Foreign Service, and Daniel Trefler, chair in competitiveness and prosperity at the University of Toronto’s Rotman School of Management. Get their analysis
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The current state of the WTO underscores the need for pragmatic trade agreements, highlights inadequacies in addressing state intervention, and affirms the need to grapple with measures taken in the name of national security, writes Bruce Hirsh, principal at Tailwind Global Strategies LLC and “of counsel” to Capitol Counsel LLC. Read the article
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Artificial intelligence (AI) investments have contributed meaningfully to U.S. economic growth, but investors could find that the financial boon is a double-edged sword next year when it brings greater job cuts, argue CFR Fellow Rebecca Patterson and Research Associate Ishaan Thakker. Get their take
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Trump’s push to oust a Federal Reserve governor risks undermining a cornerstone of U.S. economic stability ahead of a critical interest rate decision in September, explain CFR Fellow Roger W. Ferguson Jr. and Research Associate Maximilian Hippold. Read more
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As U.S.-backed stablecoins gain traction, they threaten to bypass China’s financial controls. The Chinese government is poised to counter with its own tightly regulated digital money, writes CFR Fellow Zongyuan Zoe Liu. Read the piece
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Stephen Walt, Robert and Renée Belfer professor of international affairs at Harvard Kennedy School, sits down with Mary and David Boies Distinguished Senior Fellow in U.S. Foreign Policy and Director of Fellowship Affairs James M. Lindsay on the CFR podcast The President’s Inbox to discuss what a realist U.S. foreign policy would look like.
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Featured From the Greenberg Center |
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As the largest global purchaser, the United States has a unique opportunity to catalyze market demand for green technology by implementing a green procurement regime, advancing both climate mitigation goals and the competitiveness of American green technology, write CFR Fellow Inu Manak and Research Associate Helena Kopans-Johnson. Read the analysis
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China’s strong Q1 customs surplus supported a strong Q1 current account surplus, but the current account surplus mysteriously slipped in Q2, even as the customs surplus increased, observe Setser and Research Associate Michael Weilandt |
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