Breaking News from Pod Save America - Trump is DESPERATE After Supreme Court DEFEAT

Episode Date: February 21, 2026

After Trump’s crushing SCOTUS defeat, what happens next? Harvard economist Jason Furman joins Jon Favreau to break down the fallout and what it means for the economy. CHECK OUT OUR SPONSOR: ZBIOTICS - http://zbiotics.com/CROOKEDNEWS CODE: CROOKEDNEWS Learn more about your ad choices. Visit megaphone.fm/adchoices

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taxes and fees extra, default terms at Mintmobile.com. All right, we got the former chair of President Obama's Council of Economic Advisors, current Harvard professor, my old colleague, Jason Furman. What's up, Jason? Nothing, nothing at all. So I saw you said that this tariff ruling was a thrilling victory for the rule of law that will mean better economic outcomes for America and the world. What do you think the economic impact of this decision will be in the short term?

Let's start there. Like, what changes over the next year? Well, it's important to take. Two things happened. The first is the Supreme Court struck down the legal authority Trump was using for about two-thirds of his tariffs, something called Aipa. But second, Donald Trump found another legal authority and brought back a whole bunch of them. But that new legal authority that Donald Trump found only is allowed for 150 days.

And after 150 days, it goes away. So to fully answer your question economically, we need to know, is Donald Trump going to find some other thing after 150 days? Is he going to do something else? Like, where we are right now, isn't that that different from where we were a day ago, except now the president is more constrained, more time limited, less flexible, all of which I think is good for the economy and good more broadly. Let's talk about the other authorities he's looking at. So you mentioned he's already trying to impose, as of today, I guess, an across the board 10% tariff that can last for 150 days until then Congress would have to vote on it. In the meantime, he said the administration will use something called Section 301, which requires investigations into unfair trade practices in order to levy some tariffs, and maybe Section 232, which I guess authorizes tariffs based on various national security threats. is what do you know about the difference with those authorities?

Like, do they just take more time to implement? He seems to think that they will allow him to end up in the same place as we were before today's Supreme Court decision. But what do you think? So, first of all, the bottom line, if he is determined to get back to the same place that he was before the Supreme Court decision, he probably could get pretty close to it. It would take more time and effort, but he probably could. There's two things, though, that are very different.

One is he may not want to get there. He certainly sounded after the Supreme Court, very angry, very defiant. But, you know, who knows where he'll be a month or two from now, let alone before the midterms. The other thing, though, is all these other tools just don't let you do nearly the same amount of arbitrary and capricious stuff he had been doing. So the way he had interpreted the law, which the Supreme Court said, was absolutely totally wrong and baseless, was that he can do whatever he wants whenever he wants. He doesn't like the tone of voice of the leader of Switzerland.

He doesn't like an ad of some local leader in Canada. Boom, the next day, blank happens. That type of you wake up and there's a new tariff policy every morning for who knows what reason. That is not totally gone, but it is much, much more gone than it was before. So in the meantime, so let's say he's got this 10% across the board tariff for the next 150 days, can companies and importers who had to pay these now illegal tariffs, what does that refund process look like?

Are they all just going to sue the government? How does that work? Yeah. So in one sense, the Supreme Court ruling was actually clearer and more unambiguous than I expected. which was in no way, shape, form whatsoever could Trump use this law that he had been using for tariffs. Can't be done. No, no, no. In another sense, though, it left open this huge unresolved question of what happens to all of the basically hundreds of billions of dollars of illegal money the administration has already done, collected. And yes, expect a lot of litigation. I think one interesting thing to

watch in that will be who exactly is litigating. The case, that was before the Supreme Court wasn't the most famous companies in the United States. It was sort of smaller, more random ones. The big famous ones are afraid of angering Donald Trump. They may be afraid of angering him by suing to get their tariff money paid back also. So there's both what the courts decide, but also which companies actually want to be seen as trying to get their money back. How do you think this ruling impacts the trade deals that the Trump administration has made with other countries? Like, what do those look like now?

What are other countries thinking right now as they hear about this decision? The short version is, I expect the deals we've already struck will largely be unchanged, but it could have a big impact on anything we're in the middle of negotiating or might be going forward. Now, first of all, the thing to understand

is the things that other countries have offered him were all pretty small. A lot of them were things the countries were going to do anyway and just repackaged in order to please him. So if you did something small and cosmetic, there's no reason to anger Donald Trump by changing it just because of the Supreme Court. So that's why most of those deals, which aren't really that exciting to me or I think to anyone, except maybe to Donald Trump, I don't think will change. The big question mark here is China. President Trump is going to China in April. he is going now with a lower tariff rate than he would have been going before,

less flexibility about raising it. And in that sense, that's the one part of it where I think we do have a legitimate set of issues with China. I would like to have leverage with China. I wouldn't mind if Congress handed the president some greater authority to negotiate effectively with China. The problem is he was taking that same authority and using it for Australia and Canada and Switzerland. and, you know, net net, that was a, that was not such a great thing. So you think President Xi probably is happier today after this ruling and probably has a bit more leverage in his negotiations with Donald Trump?

I think he is, but, you know, I think he's also happy that Donald Trump chose to wage trade wars on countries around the world, too. I mean, we had an alternative strategy here of saying, you know what, we just don't really have a problem with Canada. We don't have a problem with Australia. we are in fact going to get together with Canada and Australia to gang up on China. That's another way we could have handled the last year and we didn't. So yeah, I think this might actually help Xi a little bit,

but the main thing that's helping Xi is just our indiscriminate war against everyone simultaneously rather than focusing on what I think is basically the one legitimate issue in the global trading system that is, you know, that is, that is complicated and problematic. How do you think this ruling will impact or might impact the Fed's thinking in terms of the size and timing of future rate cuts or will it? I mean, it does seem like based on what Trump said today, based on the fact that a lot of this is going to take time to sort of work through the process of potentially levying new tariffs

with new authorities, it seems like we're not in a very different place than we were before the Supreme Court ruling, also in the sense that the uncertainty that we had before the Supreme Court ruling seems to at least remain in place for now. Yeah, I think there's a little bit less uncertainty now because you're taking away some of the most arbitrary things. A little bit of an impetus to better economic performance, and there'd be a lot if Donald Trump weren't doing new tariffs to replace the ones the Supreme Court had taken away, and then a little bit less inflation as well. Sort of net, net, net.

I think for the Fed, it's largely neutral. And you saw that in financial market pricing of the expectations of Fed rate cuts didn't change much after today's rolling. Pod Save America Breaking News is brought to you by Zbiotics pre-alcohol. Zbiotics pre-alcohol probiotic drink is the world's first genetically engineered probiotic.

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How are you feeling about where the economy is more generally right now? We had new GDP numbers this morning. We had some jobs numbers and inflation reading. Where do you think we are right now? I feel like you've been a little more bullish on where the economy is than maybe maybe some folks. I think there's some Democrats that think Donald Trump has done terrible policies, which I also think and completely agree with,

and that therefore you will get some huge dramatic punishment. And the second place is, I don't think true. I actually didn't think it was true. I wasn't ever predicting a recession. I think probably his policies have taken maybe half a point off economic growth. So over the last year, it was 2.2%. it would have been 2.7%. For most people, most humans,

could not tell you the difference between 2.2 and 2.7% growth. It is $1,000 a family. So if Donald Trump had summoned every family in the country to Washington, told them to bring $1,000 with them and asked them to set it on fire on the mall, we'd all remember him

as the most catastrophically idiotic president in our history. That is basically what he has done. So he has done a very bad thing, but he's also done a thing that is the difference between 2.2 and 2.7, that it'll never be able to prove for sure that what I just said about the $1,000 was correct. Going forward, you know, anything can happen in the economy. It's super hard to predict, but I think we'll probably do basically fine. I don't think anyone should

build a midterm election strategy around a huge recession or a huge outbreak of inflation or something like that. Now, people are very unhappy in the economy right now. I'm not entirely sure I understand why. I have some theories about it. But broadly, yeah, I mean, my message as sort of an economist would be the economy, sort of okay. It's definitely worse because of Donald Trump, but it's sort of okay, and it's likely to stay sort of okay. And don't build a plan that assumes something dramatically different from that. Donald Trump is Donald Trump, but he is surrounded by economists, I'm sure some that you know, that are credentials, that sort of know what they're talking about, somewhat mainstream, if, you know, to the right, he is obviously surrounded by political advisors

who want to do well in the midterms. Like, why do you think that people like Scott Bessent and Kevin Hassel and all these people are just, do you think that they're so intent on continuing down this road of imposing tariffs just because Donald Trump is mercurial and they have to do whatever Donald Trump says? Or is there any kind of argument? Because you would imagine that there's one scenario after the Supreme Court ruling where the administration says, you know, we're disappointed with the ruling, but also we've used tariffs and the threat of tariffs to make some great trade deals all around the world. And we're going to keep going and try to grow this economy even more and do what we can to lower costs. And that's that.

You just sort of let it go and realizing that it's probably both an economic benefit to the country and a political benefit to Donald Trump to just take this ruling and, you know, move on. It mystifies me. The biggest argument for tariffs was that it would bring manufacturing jobs back. It hasn't. We've lost manufacturing jobs almost every month since Liberation Day. And that's not surprising. When you raise the price of steel, you're also making it harder to build cars in America. and you're hurting auto jobs.

Probably the number two argument was it would reduce the trade deficit, which is a measure, they argue, of how much other countries are taking advantage of the United States. Now, I don't agree with any of the economic logic there, but just as a fact, the trade deficit in 2025 is almost exactly the same as what the trade deficit was in 2024. So it failed that second test.

They've trotted out a third thing that wasn't a core part of the argument to begin with, where I think they are actually telling the truth, which is that the tariffs have raised tons and tons of tax revenue. And that is true. Taxes have gone up. The deficit is lower because of them. But then that gets to your point.

He has some political advisors, and I didn't think the idea that you were raising taxes on the middle class to bring down the deficit was really a political winner. I should say as an aside, as an economist, I can think of 80 other ways to raise taxes that would be better for the economy than this. But yeah, that's the one thing they've accomplished is a tax increase. And they actually brag about it.

They don't use exactly those words. But the words they use are not that different from it raised taxes and it's bringing in a lot of money. And after today, they're not just bragging about it. Now they are fighting to continue that middle tax, that middle class tax increase, fighting with all that they have. Yeah, no. And you don't hear about the manufacturing jobs anymore because they're negative. He is still talking about the trade.

deficit, which is sort of strange because it hasn't improved, but I guess I shouldn't be that surprised that he's undeterred by the data. But yeah, the revenue argument is front and center for them. And I don't know, there's a like tiny little bit of my heart that feels sort of warm to the fact that Republicans are finally talking about revenue. I just wish they were talking about a less terrible form of revenue. Well, I don't know about you, but I'm looking forward to Republicans in Congress either having to vote on extending this 10% across the board tariff in 150 days or, as Senator Bernie Moreno from Ohio wants to do, codify the current tariffs that just got struck down into law. So I guess good luck, good luck getting the votes for that in Congress.

I'm trying to picture the law that says like on Tuesday the tariff is this on Switzerland on Wednesday. It's that and on Thursday it goes back to that. It's a tough one. You wouldn't want to be involved. that legislative writing, I'm sure. Jason, thank you so much for joining and for making us all smarter

about the decision today. We appreciate it. Great to see you. Take care.