Article I, Section 8, of the Constitution specifies that ‘The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises.’ The Government thus concedes that the President enjoys no inherent authority to impose tariffs during peacetime.
Chief Justice John Roberts
Just when the President’s month looked so promising, his Friday began with bad news. At 8:30 AM, the Bureau of Economic Analysis (BEA) reported Q4-2025 GDP growth of 1.4%: below the 2.9% consensus prediction, and way below the 5% predicted by Commerce Secretary Lutnick. At 10:00 AM, the Supreme Court released its 6-3 ruling that the International Emergency Economic Powers Act of 1977 (IEEPA) did not give Mr. Trump the “legal authority” to unilaterally impose sweeping import taxes.
Trump reacted with the authenticity/no politesse that Republicans love/hate. At 7:50 AM, he posted on Truth Social: “The Democrat Shutdown cost the U.S.A. at least two points in GDP. That’s why they are doing it, in mini form, again.” A little early there, Mr. President. At 12:45 PM, he addressed the tariff ruling at a White House press conference: “I’m ashamed of certain members of the court for not having the courage to do what’s right for our country. It’s my opinion that the court has been swayed by foreign interests.” So much for divided government.
Trump’s reaction was too political for me, but it was not wrong, because Democrats quickly blamed the economic deceleration on his “erratic” trade policies and sweeping tariffs. Sen. Elizabeth Warren (D-MA) falsely claimed his “red-light, green-light tariffs” were shrinking the economy. MS Now economist Jared Bernstein proclaimed Trump guilty of “egregious presidential overreach.” It’s rumored that Democrats will march out of the SOTU speech on Tuesday. That’s just politics – – and so below what we the people deserve.
Tariffs, Not Tomahawks
My reaction on “Liberation Day” was disgust, but that’s because I did not see the New Thinking of the Trump administration, which Larry Kudlow explained this weekend in The New York Sun. “Mr. Trump used tariff negotiations as a means of conducting foreign diplomacy. His recent deal with India – to reduce tariff [rate] if they stopped buying Russian oil – is a perfect example of his hand-in-glove interaction of tariffs and diplomacy. Trump is fighting for trade reciprocity, to level the playing field, to rejuvenate the American economy, and to attract investment money into this country from all around the world. Why the Supremes would want to interfere with that is beyond me.” Well stated, sir!
Earlier, CNBC reported Trump had justified most of his tariffs by a “novel reading of the IEEPA, [including] near-global ‘reciprocal’ tariffs, and separate duties related to the alleged trafficking of deadly drugs into the US,” and that the IEEPA only allowed the president to “regulate” imports in the face of certain “unusual and extraordinary” threats. The view here is that America’s “divided government” stumbled because six justices ignored today’s “unusual and extraordinary” threats to American lives.
Shouldn’t the right to life supersede all others? Isn’t it better that Trump pressured Mexico’s president to stop the drug and human-trafficking cartels, rather than order US troops to storm the Sinaloa Cartel’s heavily fortified fentanyl factory? Shouldn’t the Court encourage a president’s “novel reading” of a law, if it allows the US to protect its interests without war? When America’s differences are with nuclear-armed China and Russia, the Court should insist on a “novel reading” of IEEPA. No Joke, and as the dust settled over the weekend, the anti-Trump cheers looked premature.
Start on the left with MS now’s Bernstein: “Some retailers of imports [could] hold sales, but firms don’t like lowering prices [that give] back a windfall…the refund process will be a total mess litigated in the Court of International Trade.” Translation: consumers should not expect relief, and companies should not expect refunds. That’s a hollow court victory for the anti-Trump crowd.
Look right to the deep-thinking senator from Louisiana, John Kennedy, who said the ruling does not erase the president’s success in using tariffs as a negotiating tool. “The president didn’t just sit around admiring that trade authority, that tariff authority. He used it, and he used it to negotiate trade agreements” (source: Fox News). And, before hoping the Court’s ruling scuttles Trump’s trade deals, look at the potential (bad) cost to America (table below):
| TRADE PARTNER | INVESTMENT PROMISE | PURCHASE PROMISE |
| The European Union | $600 billion | $740 billion in energy and $40 billion in AI chips |
| Japan | $550 billion | $15 billion annually in agricultural and energy products |
| South Korea | $350 billion | $100 billion in energy purchases |
| Malaysia | $70 billion |
If MS Now’s Bernstein is disgusted by “egregious presidential overreach” but not by losing $1.57 trillion in foreign investment and over $895 billion in US exports, he’s not much of an economist. Luckily, Sen. Kennedy went on to say that none of the trade deals will fall apart over the IEEPA ruling (Indonesia has already confirmed the deal, signed on February 19, 2026, is still valid).
Don’t Sleep on the GDP Trajectory
In response to the Q4 2025 GDP, Kevin Hassett spoke for the White House, joining the President in blaming the “Democrat shutdown (that) took about 2% off the number” (source: Fox Business). He reassured investors that GDP trajectory is “way north of three” [percent]. As a political matter, Democrats look like a problem. Look at the chart above, which shows GDP growth slumping under a Democrat president and after a Democrat shutdown. Whose side are they on?
From Day One, Democrats have opposed the Trump administration’s efforts to cut costs and regulations, return money to taxpayers, and stimulate the US economy – when they know better. They knew the 2024 budget deficit was a record $1.8 trillion, but still stormed agency buildings where DOGE was trying to root out waste, fraud and abuse. They know higher GDP growth increases federal tax receipts, but still stopped federal funding for 43 days in the fall. If they’re not putting party before country, they sure have an odd way of showing it.
So…I’d caution Democrats from early-calling “victory” over Team Trump. If they deep-dive into the BEA’s Q4-2025 report, they’ll see the “current-dollar measure” (not inflation-adjusted) of the last quarter’s GDP growth was 5.1%, compared to 4.3% for the same period in 2024. The primary driver of that growth was a 5.5% increase in “final sales to private domestic purchasers” (excludes government activity). Thus, Howard Lutnick was not wrong about 5% growth in the last quarter, because…
Everyday folks felt the 5.1% “current dollar” GDP rise because annual inflation (2.7%) was lower than annual wage gains (3.35%) last year.
CEIC Data reports US business confidence rose 4.4% last month, and ISM Manufacturing reports the PMI jumped to 52.6, because new orders “indicate the strongest performance” since 2022.
Quarterly federal government “consumption expenditures and gross investment” average $1.9 trillion: it fell 1.15% in the last quarter, compared to a 0.57% increase a year ago. That’s a big reversal, and the worst performing segment of GDP measurement. Democrats left we the people with record budget deficits; so, of course, Lutnick sees a government slump as good news (he wants to “privatize” the economy).
The State of the Union is Now Must-Watch TV
Democrats are posting on social media like mad that “they’re not going to treat” the State of the Union like “this is normal” or “business as usual.” Many will boycott in advance (e.g. Adam Schiff), others will march out during the President’s speech, and Gov. Spanberger (D-VA) will explain how “Americans suffer in Trump’s economy” in her rebuttal.
Democrats with goofy signs and marching out to the strains of “We Shall Overcome” on live TV.
Trump with a microphone and unlimited time.
With no Bad Bunny, it will be more entertaining than the last Super Bowl.