>> President Donald Trump says the country is facing, quote, fundamental international payment problems.

He made the proclamation while raising a global 15% tariff in the week of a Supreme Court ruling that struck down his previous tariffs imposed under the international emergency Economic Powers Act, AKA EPA in a 63 vote.

joining us now are Benjamin Krause, executive director of the University of Chicago's Becker Friedman Institute for Economics and on Zoom, Harold Krantz, professor of law.

Chicago can't College of Law.

Welcome back.

Thanks to you both for joining us.

Okay.

So let's start with why this is happening in a truth.

Social Post, President Trump wrote, quote, I as president of the United States of America will be effective immediately raising the 10% worldwide tariffs on countries, many of whom many of which have been ripping the U.S.

off for decades without retribution.

Until I came along to be fully allowed and legally tested 15% level.

Ok, Ben Krause, is there any validity to what Trump is saying about the United States ripped off by foreign trade partners?

So unfortunately, the evidence that we've seen we actually do the research took.

Take a look at how the U.S.

has been treated in its various relationships across the globe.

>> Just doesn't stand up to that particular statement.

What we find instead is that the U.S.

is benefiting from the global trade system.

We usually have says a arrangements that are two-thirds are there better than two-thirds of other countries out there in general.

When you think about trade, you should think about negotiations with your friends and neighbors.

When you share, you generally end up getting better results back from those people.

Is it possible to be ripped off like is that nature of of a trade agreements?

>> That one side is benefiting more than the other.

>> So you could imagine a circumstance where under coercion, someone could get the upper hand in.

It's within the models that we have.

We do see that there could be some potential upside of really playing hardball.

However, that assumes that the other side won't reciprocate, won't retaliate.

And in fact, we stand to lose a lot more if other nations start to retaliate.

And we're starting to see early signs that countries are responding in kind to the new way they were behaving on the international field because something that the president has maintained throughout his second term is that we're importing more than we're exporting.

Therefore, this imbalance is hurting us.

One of the things that he talked about especially on Liberation Day was the needed maintain a balance of trade with every single individual country.

And that's just not what we see from the basic foundations of economic science.

It would be as if you would wants to maintain a perfect balance of trade with say your barber.

I don't go to the barber that often as you might imagine.

But if I were to go having a balanced trade would mean that every time I buy a service from him, he buys a service for me.

And that just doesn't make any sense.

What we know from economics instead, as we should all lean into our comparative advantage.

And when we do that, we all end up benefiting.

I mentioned earlier, the potential loss if other countries start retaliating against us, it could be as if each one of our households facing something like one to $2000 hit.

But our annual income, if other countries start responding in the way that we have as late Harold Krantz, as mentioned to the president, he's utilizing a different law this time to justify these new tariffs, the trade act of 1974.

Section one.

22.

>> First, would you would you explain that for us?

What is back?

>> For the train at Rosen time when we read about depreciation of us dollar, the U.S.

dollar was falling as opposed to other currencies around the world.

during the Nixon administration, we, of course we've been hit by the Vietnam try to solidify our position in part by ensuring that there were tools that the president could use case there was a serious imbalance funds international.

So what the president has used isn't this lever that he's used his recently is not about trade imbalance.

It's problem of international balance of payments.

The idea more money is going out from the United States and coming But there's no proof of that.

And so you could, even though there is a more of a statutory folk here for the president, evidence that the president has mustered today to say that there is a serious balance of international payments is simply wanting and you have to aggregate all the payments going in and out.

And the only issue that we had back in the 1974 was that the dog was picked to the gold.

Not that the dollar's no longer pick to the goal.

it's really been relatively stable.

And so there is no perceived needs that we can tell so far this particular tour the question is, will the court look behind the statement by president that he is there is an international.

Fund balance 2 to strike it may be a little closer than the last one, but I think that because of the last case, the court be skeptical look at this more carefully.

That might and go behind the declaration of findings by the president decided he simply isn't.

There's not enough to back it up.

If there is some kind of serious and unbalance.

So it sounds then like, you know, considering his use of EPA, the international emergency Economic Powers Act.

>> It sounds like you question whether this move is legally sound invoking this particular act.

>> Will you to get a slightly different So we If the court look at the presidential findings, not tougher to them and realized that in the context of his retreat from it that the president just what grasping at straws.

So this is set up for another kind core challenge.

It's going to take probably over a to get back to the Supreme Court and we're going to see economic dislocation in the meantime, not to mention the difficulty trying to get all the refunds of billions of dollars on the tears already been collected under up.

>> Been cross the Howell everyday Americans be implemented by the new tariff.

So one of the things that's important to keep in mind is that we hadn't actually seen the full brunt of the costs of >> the previous tariff regime really reach We know from research is it usually takes about a year for that to happen.

Statutory rape.

So statutory rates that the universe that the president had set, there were something in the range of about 27% as of September.

Now he's saying that he's going to be taking things up to 15%.

As you can think of that is basically that the maximum, the ceiling that could potentially be charging.

What we know is that we were only paying about 14% by the time all of this is taking place.

So there's still range for us to continue to increase.

We already when you hear about tariffs should be thinking about a tax on imports.

a rough rule of thumb is that we should be expecting to pay something like 15% more for everything that we're buying it from that, anything that we're buying from any other country.

Okay.

>> Governor JB Pritzker.

He's demanding $1700 tariff refund for every Illinois family totaling nearly 8.7 billion dollars for the state.

Here's what the governor had to say about that earlier today.

>> I'm hoping that the president will refunds to people who have paid these exorbitant tariffs.

average working people are the ones who suffered under the tariffs that have now been stricken by the Supreme Court.

>> Harold Krantz late this afternoon.

Fedex also saying that they plan on suing to get their money back as well or a resident of the state of Illinois.

They owed compensation compensation based on this.

>> I mean, it's a great political move by our governor I wouldn't tell any of your viewers to look at their bank accounts and that any time soon.

It's a long shot is is a legal argument.

But there will be a very complicated process up.

Fedex and other importers well will be lining up to try to get the money back and then we'll have to make a decision as to which companies have already passed on the tariffs to consumers and which happened.

And so it's going to be sort of a long drawn out messy process.

It would be easier just to give money back to Susan to be ongoing elsewhere.

But I doubt that the courts are going to go down that route.

>> Thank Ross.

Same question to you.

Is it likely that anybody gets a refund?

So at the end of the day, we're social scientists were trying to describe what happens in terms of trying to guess about what would play out in the future.

I would certainly yield to my legal calling social scientists predict the future.

generally the kind of work that we do.

We usually take a look at the evidence that we have really start thinking about what's going forward.

What I would highlight for the people watching at home is that we've already been paying these these taxes out of our own pockets.

And we also have evidence to suggest that oftentimes we're not only paying the rate that's charged but potentially even more.

Last time I was on, I talked about how when we're looking at tariffs from the previous Trump administration, we up paying about a $1.60 more on every bottle of 5 buck Chuck, who are picking up as a result of the tariffs.

But the government is only collecting about a $1.20 more, which is to say that even if we were to get these rebates, there's just not going to be the same amount of money out there as we've already paid in prices, OK, that's good to know.

We're