The Tariff Refund Trade
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What is the probability that the US Supreme Court will strike down President Donald Trump’s broad tariffs? There are a number of ways of thinking about that question. One is what you might call legal analysis: You can look at the text of the US Constitution and the relevant statutes, as well as relevant legal precedents, and try to figure out whether the tariffs are legal or not. If they seem very illegal, then the probability that the Supreme Court will strike them down is high; if they seem very legal, low; if the law is genuinely ambiguous then maybe it’s 50/50. In previous columns I have sort of gestured in the direction of this analysis, but honestly this might be the worst way of thinking about the question.
A more promising approach is what you might call legal realism: You notice who sits on the Supreme Court and what their preferences are about partisan politics and executive power, and you try to figure out what that predicts for their ruling. I have gestured in this direction as well, and it seems a bit more, um, realistic than relying on the law.