U.S. President Donald Trump‘s tariff powers are before the Supreme Court at a hearing Wednesday, while former Commerce Secretary Wilbur Ross has his thoughts on how the justices might rule.
Ross is a banker best known for acquiring and restructuring failed companies. In 2004, his company WL Ross & Co. bought Cone Mills and merged it with Burlington Industries, forming the new entity International Textile Group. He did similar deals in steel, coal and telecommunications. He also served as the 39th U.S. Secretary of Commerce from 2017 to 2021 during Trump’s first term as president.
News caught up with Ross to discuss several topics ranging from shoe production to tariffs and possible refunds, as well as the Supreme Court hearing and how the justices might rule post-hearing.
Footwear News: How do you think the Supreme Court justices would rule? Should vendors, such as footwear suppliers, expect that there could be refunds/rebates down the road?
Wilbur Ross: I don’t think that they will knock out the whole thing. That would cause such a huge confusion in a whole lot of directions.
For one thing, who would get the rebate? The person who wrote the first check would be the importer, but the importers passed all or part of it along to their customer, and then the retailer passed all or some part of it along to the final customer. So who really paid the tariff and who should really get it back, and what on earth would be the mechanism for deciding that? So that’s one set of complexities.
The other set of complexities is that, by and large, these have become bilateral agreements. So it would be a little bit weird for the court to knock out a bilateral agreement that we had made with another country. That would be strange, and if it happened, then what would it mean to the tariff relief that other country had granted to our producers?
FN: Is there any option for the justices if they decided to “split the baby” and say some tariffs were okay but not others?
WR: It’s possible that they might decide to get very granular, and if they did, then some of the tariffs are a bit hard to categorize as national emergency. The special tariff on Brazil because of the way they treated Bolsonaro, that’s hard to cram that in as a national emergency for the U.S. Similarly, the province of Ontario that ran the TV ad in effect quoting Reagan as being adverse to what Trump has done would be hard to imagine as a national emergency. So, there are a few things at the periphery that might be relatively easy for them to knock out. [Editor’s note: Brazil and Canada do not yet have bilateral agreements with the U.S. in connection with reciprocal tariffs.]
I think that if they had just wanted to throw out everything, there was a much easier way they could have done it and that would be just not to hear the lower court decisions. But they made the decision to take the case, so my guess is it’ll be a split decision, but I would be very surprised if [they] just knocked out the whole thing.
FN: Do you think that they might find some way to set a limitation on how much further Trump can go with tariff rates?
WR: I don’t know, but I don’t think there’s much that [Trump] intends to do beyond what he’s done already. It would be unusual for a court to knock out something that has become a bilateral agreement and it would raise immense questions… Countries like Japan and South Korea have committed to make big investments in the U.S. What do they do about that? Do they go ahead with it? Do they go ahead with lowering their tariffs on American goods as was agreed to in the deal?… The amount of confusion that would come about is quite vast.
FN: Fashion and footwear source from countries where there are high tariff rates, particularly in shoe production. Do you think that at some point Trump may go even higher on tariffs?
WR: Once you go over 25 or 30 percent, you’ve pretty well eliminated that country’s exports from coming in because that’s a big gap to make up. So if they put another 10 percent, or 20 or 30 on top, it’s really just symbolic, like when he put the 100 percent extra tariff on China. It had no true economic impact…and the Chinese knew that it was a symbolic thing [reflecting] Trump stating how angry he was that they hadn’t made any progress [in a trade deal].
FN: A lot of the footwear and apparel vendors have been questioning the need for added tariffs. From your experience from Trump’s first administration, do you think that these reciprocal tariffs were needed?
WR: Well, we didn’t finish the job in the first administration. Many countries we ran out of time to approach them. There was stuff left undone…Most Asian countries we didn’t do anything about [and] we did very little with Europe because we simply ran out of time. Other than the few big ones, it was a work in progress.
Even with China, they never did implement Part One, what was meant to be a very comprehensive agreement and that’s sort of fallen by the wayside. I didn’t think that Xi [Jinping, China’s president] would be particularly interested in a big deal anyway because then he would have to acknowledge publicly that he was agreeing to more tariffs from the U.S., whereas now he hasn’t agreed to them but they’re in effect anyway. It’s kind of easier for him politically.
FN: Trump’s been pushing to get some manufacturing back to the U.S. In terms of fashion, particularly footwear where factories are specialized and hard to duplicate quickly, do you think that shoe production would ever come back to the U.S.?
WR: The big countries now are Vietnam and Mexico. They are the big beneficiaries [of the move out of China] because their costs are very, very low. I know [athletic performance] shoes, those are very complex products. There are something like 150 different parts to a tennis shoe. Whether we would ever want to be making them?… It’s a tough thing to manufacture if you don’t have cheap hand labor [because] its very hard to automate.
FN: How long do you think it’ll take before we might get a decision from the Supreme Court justices?
WR: There really is not a lot of evidence. It’s really arguments on what are the extent of the powers that [Trump] has under IEEPA (International Emergency Economic Powers Act). The amount of decision-making is relatively limited, even though it’s very, very important…. I would think they would be pretty prompt because they only got a limited stay of the lower court ruling — the appellate court ruling — so there’ll be a lot of pressure on them to resolve this quickly.
