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New Tariffs Challenged & NFL Antitrust Investigation · Bloomberg Law

• 0:02
  Speaker 1: This is Bloomberg Law, with June Grossel from Bloomberg Radio.
• 0:08
  Speaker 2: A group of small businesses and mostly Democratic led states
• 0:13
  Speaker 2: are urging US trade judges to toss out President Trump's
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  Speaker 2: latest global tariffs, arguing they were issued under a law
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  Speaker 2: that became outdated when the US ditched the gold standard
• 0:26
  Speaker 2: decades ago. The case involves Trump's use of Section one
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  Speaker 2: twenty two of the Trade Act of nineteen seventy four
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  Speaker 2: to place a ten percent tax on imports. Trump issued
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  Speaker 2: the tariffs under that section, which had never been invoked before,
• 0:43
  Speaker 2: after the Supreme Court on February twentieth overturned his earlier
• 0:48
  Speaker 2: global levies based on a different law, the International Emergency
• 0:53
  Speaker 2: Economic Powers Act, or AIPA. My guest is trade expert
• 0:57
  Speaker 2: Timothy Brightbill, a partner in co chair of the International
• 1:01
  Speaker 2: Trade practice at Willie Rhyin. Tim, give us the lay
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  Speaker 2: of the land right now for companies and industries paying
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  Speaker 2: tariffs on imports.
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  Speaker 3: As you know, the Supreme Court has struck down the
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  Speaker 3: first set of tariffs under the International Economic Emergency Powers
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  Speaker 3: Act for AIPA, and more than three thousand companies have
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  Speaker 3: now sued seeking refunds of those tariffs In the meantime,
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  Speaker 3: President Trump put in place new tariffs under Section one
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  Speaker 3: twenty two of the Trade Laws. Those are tariffs of
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  Speaker 3: ten percent that are now being collected on our trading partners.
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  Speaker 3: President Trump then hinted that he might increase that amount
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  Speaker 3: to fifteen percent. For right now they are ten percent.
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  Speaker 3: So that's the current state of play with companies seeking
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  Speaker 3: refunds of the first tariffs while the administration is collecting
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  Speaker 3: these new tariffs under Section one twenty two, which has
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  Speaker 3: itself been challenged in the courts.
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  Speaker 2: The Court of International Trade heard three hours of arguments
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  Speaker 2: on Friday from a small group of businesses in twenty
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  Speaker 2: four mostly Democratic led states, asking the judges to toss
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  Speaker 2: out those tariffs. So tell us about the challenge.
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  Speaker 3: Yes, so this was a challenge filed by a number
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  Speaker 3: of Democratic attorneys general as well as businesses that have
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  Speaker 3: been paying these tariffs under section one twenty two. The
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  Speaker 3: challenge is at the Court of International Trade, where all
• 2:37
  Speaker 3: trade disputes are heard, and a three judge panel of
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  Speaker 3: the Court, which is somewhat unusual. Normally, a single judge
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  Speaker 3: will handle appeals, but on this case, like the IEPA case,
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  Speaker 3: there were three judges that heard argument on Friday, and
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  Speaker 3: the challenge is targeted at Section one twenty two, which
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  Speaker 3: allows the president to take action to address fundamental international
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  Speaker 3: payment problems, and the law specifically mentions special import measures
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  Speaker 3: to deal with large and serious US balance of payments deficits. Now,
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  Speaker 3: this is a lot that was passed in nineteen seventy
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  Speaker 3: four and has not been used, so this is the
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  Speaker 3: first time it has been used by any president. And
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  Speaker 3: it does specifically allow the president to impose a temporary
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  Speaker 3: import surcharge or a tariff of up to fifteen percent
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  Speaker 3: for a period not exceeding one hundred and fifty days,
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  Speaker 3: so that would be until about July twenty fourth. So again,
• 3:44
  Speaker 3: this has been challenged by a number of Democratic state
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  Speaker 3: attorneys general as well as importers that are paying the
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  Speaker 3: tariffs right now. And that was the argument that took
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  Speaker 3: place on Friday.
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  Speaker 2: So what are the Democratic state attorney generals saying about this?
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  Speaker 2: Why do they say it should be tossed out?
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  Speaker 3: Yes, So their challenge is that the United States does
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  Speaker 3: not have a balance of payments deficit, although we do
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  Speaker 3: have a large and persistent trade deficit, that a balance
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  Speaker 3: of payments deficit is different and in fact, the administration
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  Speaker 3: when it justified using the law, talked about large trade deficits.
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  Speaker 3: But we don't have a large and persistent balance of
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  Speaker 3: payments deficit because we have a floating exchange rate, so
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  Speaker 3: economists would say, and the parties challenging the law would
• 4:34
  Speaker 3: say that the overall balance of payments always balances out
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  Speaker 3: because the trade deficit is offset by foreign investment, so
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  Speaker 3: we have a financial account surplus to offset the trade deficit.
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  Speaker 3: So that is their main argument is that we don't
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  Speaker 3: have a balance of payments deficit at all. We just
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  Speaker 3: have a trade deficit, and that is different, and therefore
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  Speaker 3: the use of Section one twenty two is not appropriate.
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  Speaker 2: Only for the Justice Department said he didn't know what
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  Speaker 2: the current balance of payments deficit is today. Is that
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  Speaker 2: important that he couldn't come up with a number?
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  Speaker 3: I think it's relevant, But I think his argument focused
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  Speaker 3: and this was a three hour argument. It was very
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  Speaker 3: technical in nature, but his argument focused on the fact
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  Speaker 3: that trade deficits were always an important part of the
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  Speaker 3: balance of payments deficit. That was true in nineteen seventy
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  Speaker 3: four and it's still true today. So whether we have
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  Speaker 3: a small current accounts deficit or none at all, is
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  Speaker 3: in their view, less relevant because we have a persistent
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  Speaker 3: trade deficit, which is an important component of the balance
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  Speaker 3: of payments deficit as it was decades ago.
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  Speaker 2: So the panel included two judges appointed by former President
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  Speaker 2: Barack Obama and one by former President George W. Bush.
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  Speaker 2: Did you get a read on how they might rule.
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  Speaker 3: I don't think there was a good sense. I expected
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  Speaker 3: going in that the three Court of International Trade judges
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  Speaker 3: would be very skeptical of President Trump's ability to impose
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  Speaker 3: these tariffs, particularly because the administration's justification was based on
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  Speaker 3: large and persistent trade deficits. But during the hearing, I
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  Speaker 3: think the judges admitted this is not an easy case.
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  Speaker 3: Judge Stance in particular said that he and his colleagues
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  Speaker 3: were not quite sure how to translate nineteen seventy four
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  Speaker 3: when the law was enacted into twenty twenty six. But
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  Speaker 3: he also did say that it's clear that a balance
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  Speaker 3: of payments deficit is not the same thing at all
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  Speaker 3: as a merchandise trade deficit. So I think what is
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  Speaker 3: less clear is what balance of payments deficit meant back
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  Speaker 3: in nineteen seventy four, And so a lot of The
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  Speaker 3: questioning from all three judges focused on the world words
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  Speaker 3: of the law, how it was enacted in nineteen seventy four,
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  Speaker 3: what it might have meant, or what Congress intended at
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  Speaker 3: the time.
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  Speaker 2: So do you think that this case will end up
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  Speaker 2: at the Supreme Court like the IIPA case did?
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  Speaker 3: I think it's it's likely that there will be appeals.
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  Speaker 3: If the plaintiffs win, the United States will almost surely appeal,
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  Speaker 3: and if the United States wins, it's a little less
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  Speaker 3: clear that the importers will appeal, but I think the
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  Speaker 3: Democratic Attorney's General probably will now and either way, if
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  Speaker 3: there are appeals, they would go first to the Federal
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  Speaker 3: Circuit in Washington and then to the Supreme Court. And
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  Speaker 3: I still think it's unlikely that the appeals would be
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  Speaker 3: done before the Section one twenty two tariffs expire on
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  Speaker 3: or about July twenty fourth. At that point, those tariffs
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  Speaker 3: would have to be reauthorized by Congress, and I think
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  Speaker 3: it's unlikely that Congress will will take that action, given
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  Speaker 3: that we're coming up on midterm elections and the tariffs
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  Speaker 3: are not universally supported and have opposition even from some Republicans.
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  Speaker 2: So I haven't been keeping track of what Trump has
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  Speaker 2: been doing with tariffs, He'll confessed. But after the AEPA
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  Speaker 2: decision by the Supreme Court, we talked about, you know,
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  Speaker 2: the different ways Trump could enable tariffs. I mean, has
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  Speaker 2: he used any of the ways that are you know,
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  Speaker 2: straightforward and clear? If there are any, I don't.
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  Speaker 3: Know, sure? Well, yes, the President is already preparing for
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  Speaker 3: the possibility that the Section one twenty two tariffs will
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  Speaker 3: either expire or be struck down by the courts, and
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  Speaker 3: so the Trump administration has initiated a series of investigations
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  Speaker 3: under section three oh one of the Trade Laws. Section
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  Speaker 3: three oh one is the same law that was used
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  Speaker 3: by the first Trump administration to impose tariffs on hundreds
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  Speaker 3: of billions of dollars of goods from China, and those
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  Speaker 3: section three ho one tariffs are still in place. The
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  Speaker 3: section three oh one only requires that there be barriers
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  Speaker 3: trade barriers that burden or restrict US commerce, and so
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  Speaker 3: the administration, through the US Trade Representative, has begun a
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  Speaker 3: number of those investigations, particularly looking at two issues. One
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  Speaker 3: is over production and over capacity of certain goods in
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  Speaker 3: particular countries, and the second one is forced labor and
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  Speaker 3: whether or not countries have laws preventing the use of
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  Speaker 3: forced labor in an even larger group of countries. So
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  Speaker 3: both of those are underway with very tight time frames.
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  Speaker 3: And those investigations mean that President Trump has this additional
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  Speaker 3: tool he can use to put tariffs in place even
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  Speaker 3: if the courts take action against the current terriffs.
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  Speaker 2: So the Court of International Trade is also hearing cases
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  Speaker 2: on the AIPA tariff refunds. I mean, where do those stand?
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  Speaker 3: Yes, So those are progressing well. And in fact, Customs
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  Speaker 3: and Border Protection has announced that it will set up
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  Speaker 3: this electronics system to do tariff refunds. It's called CAPE,
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  Speaker 3: or Consolidated Administration and Processing of Entries, and so Customs
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  Speaker 3: has announced that it will launch the first phase of
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  Speaker 3: this CAPE refund system next Monday, April twentieth. Now, it's
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  Speaker 3: somewhat limited in scope. The first phase of refunds that
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  Speaker 3: can be applied for it covers recent entries and recent
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  Speaker 3: tariff tariffs that have been paid but not finalized. It
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  Speaker 3: doesn't cover older tariff entries yet, but the this is underway.
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  Speaker 3: Customs has been building this automated system. The courts have
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  Speaker 3: been monitoring it with almost weekly reports and In fact,
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  Speaker 3: there's another progress report due to the Court of International
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  Speaker 3: Trade tomorrow or April fourteen, so at least some importers
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  Speaker 3: who paid the iepoor tariffs should have a way to
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  Speaker 3: file for those refunds relatively soon.
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  Speaker 2: Is there any answer yet to the question of whether
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  Speaker 2: individual you know, Americans and any other entities that paid
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  Speaker 2: higher prices because of the tariffs can get their money
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  Speaker 2: back if the direct importers get refunds.
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  Speaker 3: There's no answer to that yet, And of course wherever
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  Speaker 3: there's a lot of money involved, there will be lawsuits behind.
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  Speaker 3: So you do have the companies that are importers are
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  Speaker 3: entitled to file for refunds, but it doesn't necessarily mean
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  Speaker 3: that consumers will get money back that they paid in
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  Speaker 3: the form of higher prices for goods. We've already seen
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  Speaker 3: some class action lawsuits file, for example, one against Costco,
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  Speaker 3: which was one of the first companies to challenge President Trump.
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  Speaker 3: While now the customers at Costco are saying, well, if
• 12:15
  Speaker 3: you get a tariff refund, we want our money back
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  Speaker 3: as well. But no, there's not going to be a
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  Speaker 3: quick resolution to that issue. And it's also much more
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  Speaker 3: difficult to figure out what consumers paid and how much
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  Speaker 3: more they paid as a result of the tariffs. That's
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  Speaker 3: not as easy as an automated refund system where the
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  Speaker 3: amounts paid by importers were automatically tracked throughout this whole time.
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  Speaker 2: Back to Section three oh one, how many countries are
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  Speaker 2: affected and what's happening next there?
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  Speaker 3: Yes, so the investigations cover twenty seven countries that the
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  Speaker 3: Trump administration is investigating for overproduction or overcapacity, and certain sectors,
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  Speaker 3: whether it be medals or consumer goods, would and lumber products,
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  Speaker 3: solar products twenty seven countries total. And then the forced
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  Speaker 3: labor investigations cover sixty countries total, so or an even
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  Speaker 3: bigger group that may not have forced labor laws that
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  Speaker 3: are as strict as the United States. And of course
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  Speaker 3: it's really important to prevent the import of goods that
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  Speaker 3: are made with forced labor, so deadlines are coming up
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  Speaker 3: there too. The deadline is this Wednesday, April fifteenth, for
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  Speaker 3: any company or group that wants to file comments with
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  Speaker 3: the US Trade Representative or also wants to request testify
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  Speaker 3: at hearings that will be held, and those hearings will
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  Speaker 3: begin April twenty eighth on the forced labor Section three
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  Speaker 3: on one investigation and may third on the overproduction or
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  Speaker 3: overcapacity Section three oh one investigations. So we expect a dozens,
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  Speaker 3: perhaps even hundreds of companies will file comments and may
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  Speaker 3: request to appear at these multi day hearings that USTR
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  Speaker 3: will hold in the very near future.
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  Speaker 2: This seems never ending, Tim.
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  Speaker 3: Yes, it's been a very chaotic year and four months already,
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  Speaker 3: and it will remain controversial and will remain something that
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  Speaker 3: changes on a day to day basis. So companies and
• 14:28
  Speaker 3: importers have to protect their rights and they have to
• 14:31
  Speaker 3: monitor the news very carefully. And lin tariffs are the
• 14:35
  Speaker 3: favorite word in the English language of this president. You
• 14:38
  Speaker 3: expect that there will be continued actions going forward. So
• 14:41
  Speaker 3: we're just monitoring this as closely as we can.
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  Speaker 2: Thanks so much for joining me today, Tim, that's Timothy Bright.
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  Speaker 2: The Justice Department has opened an anti trust investigation into
• 14:52
  Speaker 2: the National Football League. According to Bloomberg sources, the investigation
• 14:56
  Speaker 2: is focusing on the broadcasting exemption in the Sports Broadcasting
• 15:00
  Speaker 2: Act and the leverage the NFL has to extract higher
• 15:05
  Speaker 2: prices which get passed on to consumers. On its part,
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  Speaker 2: the NFL says its media distribution model is fan and
• 15:13
  Speaker 2: broadcaster friendly, with over eighty percent of its games on
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  Speaker 2: free broadcast television. Joining me is anti trust law expert
• 15:22
  Speaker 2: Harry First, a professor at NYU Law School. Harry tell
• 15:26
  Speaker 2: us about the anti trust exemption that the NFL has.
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  Speaker 1: Yeah, this is an old it's an old statue, nineteen
• 15:33
  Speaker 1: sixty one Sports Broadcasting Act. It came out of some
• 15:38
  Speaker 1: litigation that actually a Justice Department had brought over efforts
• 15:43
  Speaker 1: by the NFL at the time to restrict broadcasting of
• 15:48
  Speaker 1: their games, so basically to protect live attendance at home.
• 15:54
  Speaker 1: So they put on various restrictions and there was some litigation,
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  Speaker 1: and the upshot was that the NFL got this exemption
• 16:02
  Speaker 1: from Congress for getting together and jointly licensing their broadcasting
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  Speaker 1: rights to television broadcasters. And that's the way the world looked,
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  Speaker 1: and that's the way it was in nineteen sixty one.
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  Speaker 2: Quite different now quite.
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  Speaker 1: Different, Yeah, in so many ways, not just the technology,
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  Speaker 1: of course, but the economic powerhouse that the NFL has become.
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  Speaker 1: I mean, I guess home attendance is important, but financially,
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  Speaker 1: I can't imagine that this is the key driver of
• 16:37
  Speaker 1: success that football thought it was both a professional and amateur,
• 16:42
  Speaker 1: quote unquote amateur at the time, we're trying to do
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  Speaker 1: the same thing.
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  Speaker 2: Republican Senator Mike Lee, who chairs the Anti Trust Committee,
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  Speaker 2: in a letter where he asked the DOJ and the
• 16:54
  Speaker 2: FGC to review the exemption, said that during the past season,
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  Speaker 2: to watch every NFL game for both fans spent almost
• 17:01
  Speaker 2: one thousand dollars on cable and streaming subscriptions. I mean,
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  Speaker 2: it's a different world because you have all these streaming
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  Speaker 2: services now.
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  Speaker 1: I guess my reaction is if someone's spending a thousand
• 17:12
  Speaker 1: bucks to watch every NFL game, they are getting what
• 17:18
  Speaker 1: they deserve, which is some sort of shock to the system. Yes,
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  Speaker 1: I mean, maybe there are some fans who do that.
• 17:26
  Speaker 1: I have no clue. My guess is not everybody does this,
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  Speaker 1: So a little hyperbole there, but so maybe that's an
• 17:33
  Speaker 1: outside figure. You know, we could also ask what fans
• 17:37
  Speaker 1: spend for season tickets, you know, and all.
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  Speaker 4: Sorts of other things that they spend money on.
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  Speaker 1: So yes, but the cenator's point is in some sense
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  Speaker 1: a valid one that obviously the technology has changed, and
• 17:51
  Speaker 1: you know, you can look at that in various ways.
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  Speaker 1: You can say, oh my god, people spending a lot
• 17:55
  Speaker 1: of money. Or you can say, oh my god, people
• 17:57
  Speaker 1: sitting in New York and WI watch a game that's
• 18:00
  Speaker 1: going on on the West Coast today and they couldn't
• 18:03
  Speaker 1: in the past because the technology didn't you know, there
• 18:07
  Speaker 1: wasn't any technology for that.
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  Speaker 2: So is the NFL supposed to figure out what's subscribing
• 18:12
  Speaker 2: to each of these services would cost consumers who want
• 18:17
  Speaker 2: to see every single game? Everything is more expensive. Now,
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  Speaker 2: do consumers have some kind of right not to pay
• 18:25
  Speaker 2: so much to see every game?
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  Speaker 1: Would that it were? So? So you've hit a really
• 18:31
  Speaker 1: good legal point. The thing that upsets consumers, obviously in
• 18:37
  Speaker 1: many any trust cases is high prices. And the thing
• 18:41
  Speaker 1: that allows firms to charge high prices is that they
• 18:44
  Speaker 1: have power in the market. And the any trust laws
• 18:48
  Speaker 1: are intended to have competition to push prices down, not
• 18:53
  Speaker 1: to allow firms with market power to raise prices as
• 18:57
  Speaker 1: they will. So in that sense, yes, this is sort.
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  Speaker 4: Of the core of anti trust.
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  Speaker 1: On the other hand, and there's always another hand, charging
• 19:06
  Speaker 1: high prices in itself is not a violation of the
• 19:11
  Speaker 1: anti trust laws. It may be if you agree with
• 19:15
  Speaker 1: your competitors on what those prices are. So that's sort
• 19:19
  Speaker 1: of maybe what's going on here, but not quite so.
• 19:23
  Speaker 1: Fixing prices is a problem, but it's a problem because
• 19:27
  Speaker 1: they're fixed, not necessarily because they're high.
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  Speaker 2: The Justice Department is focusing on that exemption, what kind
• 19:35
  Speaker 2: of things do you think they'll look at? Isn't it
• 19:38
  Speaker 2: pretty much out in the open what's been happening.
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  Speaker 1: So one of the things that's interesting, of course, is
• 19:44
  Speaker 1: that we don't really know what this investigation is or
• 19:48
  Speaker 1: how this one happens to be leaked, as opposed to
• 19:53
  Speaker 1: other things that who knows the Justice Department's doing, So
• 19:56
  Speaker 1: you have to wonder a little bit about exactly what's
• 19:58
  Speaker 1: going on because we don't really know what they're looking at.
• 20:02
  Speaker 1: So one of the things may be that not everything
• 20:05
  Speaker 1: that the NFL is doing is covered by the exemption.
• 20:08
  Speaker 1: So this only covers agreements that involve the joint licensing
• 20:13
  Speaker 1: of broadcasting rights to over the air television. So there's
• 20:18
  Speaker 1: a lot of licensing that goes on now or more
• 20:21
  Speaker 1: and more involving streaming services, which is what senatorly talked
• 20:25
  Speaker 1: about now that's not covered by the exemption at all,
• 20:29
  Speaker 1: So it's unclear what the interaction may be between it
• 20:34
  Speaker 1: is obviously an economic interaction between the two, but what
• 20:38
  Speaker 1: the legal interaction is is a little unclear. So the
• 20:43
  Speaker 1: Justice Department may be exploring simply what, you know, what's
• 20:47
  Speaker 1: being done that may affect those agreements that are not
• 20:51
  Speaker 1: exempt under the Sports Broadcasting Act but that are subject
• 20:55
  Speaker 1: to you know, straight up anti trust law, in which
• 20:58
  Speaker 1: case the NFL have a problem because depending on how
• 21:02
  Speaker 1: the contracts.
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  Speaker 4: Are written, so there may be a lot to investigate.
• 21:06
  Speaker 1: The Justice Department might call for, you know, removing the exemption,
• 21:11
  Speaker 1: although they don't usually endorse legislation.
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  Speaker 2: ESPN reported that Fox was behind the lobbying effort that
• 21:19
  Speaker 2: led to the federal investigations.
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  Speaker 1: Well, first of all, the Wall Street Journal broke the
• 21:25
  Speaker 1: story about the investigation. That's one and two, the editorial
• 21:30
  Speaker 1: board of the Wall Street Journal came out against this
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  Speaker 1: exemption the Sports Broadcasting Act.
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  Speaker 4: So number three, Fox is one.
• 21:42
  Speaker 1: Of the broadcasters that carries NFL games and that the
• 21:48
  Speaker 1: NFL is pushing to sort of tear up the current
• 21:53
  Speaker 1: contract and renegotiated a higher you know, paying the NFL
• 21:59
  Speaker 1: more money. So Fox has an obvious economic self interest
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  Speaker 1: and you know, that's shocking but true. They're potentially being
• 22:09
  Speaker 1: held up for these higher fees. Not a consumer right,
• 22:12
  Speaker 1: as we point it out. But you know they don't
• 22:15
  Speaker 1: want to pay more money, which is interesting. It means
• 22:18
  Speaker 1: that you know they can't just quite pass it all
• 22:22
  Speaker 1: onto the advertisers.
• 22:24
  Speaker 4: You know they're facing some limits too. So yeah, so
• 22:28
  Speaker 4: they're upset about it.
• 22:29
  Speaker 2: Stay with me, Harry Coming up next, the jury is
• 22:32
  Speaker 2: still out in the Live Nation antitrust trial. I'm June
• 22:37
  Speaker 2: Grasso and you're listening to Bloomberg. And that's it for
• 22:40
  Speaker 2: this edition of the Bloomberg Law Show. Remember you can
• 22:43
  Speaker 2: always get the latest legal news on our Bloomberg Law Podcast.
• 22:46
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• 22:55
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• 22:58
  Speaker 2: at ten pm Wall Street Time. I'm June Grosso and
• 23:01
  Speaker 2: you're listening to Bloomberg.
• 23:07
  Speaker 3: Mhmm