Trump admin claims Social Security, Medicare at risk if tariffs blocked
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President Trump holding a tariff report. Photo: Chip Somodevilla/Getty Images
The Trump administration on Monday told a federal appellate court that overturning the president's tariffs could lead to a 1929-style depression that would endanger federal benefits like Social Security and Medicare.
Why it matters: The letter from Solicitor General D. John Sauer and assistant attorney general Brett Shumate claims the U.S. would be on the hook to repay trillions of dollars it hasn't actually been paid, from deals that haven't yet been fully signed.
Catch up quick: The U.S. Court of Appeals for the Federal Circuit is due to rule soon on whether to uphold or overturn the Court of International Trade's late-May ruling striking down most of Trump's tariffs.
- Oral arguments were almost two weeks ago, but on Monday Sauer and Shumate filed a supplemental letter offering what they said were fresh reasons to preserve the tariffs.
What they're saying: "If the United States were forced to pay back the trillions of dollars committed to us, America could go from strength to failure the moment such an incorrect decision took effect," they wrote.
- "These deals for trillions of dollars have been reached, and other countries have committed to pay massive sums of money. If the United States were forced to unwind these historic agreements, the President believes that a forced dissolution of the agreements could lead to a 1929-style result.
- "In such a scenario, people would be forced from their homes, millions of jobs would be eliminated, hard-working Americans would lose their savings, and even Social Security and Medicare could be threatened."
Context: The various tariff agreements struck with the likes of Japan, South Korea and the EU include pledges to establish huge investment funds to finance projects in the United States, more than $1 trillion in total.
- But those aren't payments to the U.S., they're financing for future projects, and even there disputes are already arising about how much actual money the foreign governments will spend.
The intrigue: Trump administration officials have said they have plans in place to replace the existing tariff program if the courts ultimately block it.
- But Sauer and Shumate's letter says those substitutes wouldn't be nearly as effective — something the administration has not conceded before.
- "Other tariff authorities that the President could potentially use are short-term, not nearly as powerful, and would render America captive to the abuses that it has endured from far more aggressive countries," they wrote.
The bottom line: Whatever the appellate court does, expect a speedy trip to the Supreme Court.
