Connect with us

Economics

Abortion-pill foes get a chilly reception at the Supreme Court

Published

on

ANTI-ABORTION ACTIVISTS were thrilled when Donald Trump won the presidency in 2016. Mr Trump had promised to appoint justices who would “automatically” overturn Roe v Wade, the 1973 case that protected reproductive rights. Three appointments later, the Supreme Court did just that in Dobbs v Jackson Women’s Health Organisation. But two years on, an oral argument on March 26th concerning mifepristone—a medication used in 63% of abortions in America—bodes ill for those hoping the court will help them keep limiting access to abortion care. At least for now.

Food and Drug Administration v Alliance for Hippocratic Medicine concerns a challenge to mifepristone by a group of doctors who oppose abortion. They persuaded a lower-court judge to de-authorise the FDA’s approval of the drug in 2000 despite a safety record comparable to Tylenol (paracetamol) and penicillin. The Fifth Circuit Court of Appeals somewhat softened that slap in the agency’s face last August. But it blocked the FDA’s moves in 2016 and 2021 allowing mifepristone to be used later in pregnancy (through ten weeks) and to be sent through the mail with a remote prescription.

Erin Hawley, representing the plaintiffs, defended the pill restrictions in her first argument at the Supreme Court. With her husband, Senator Josh Hawley, watching from the public gallery, she told the justices that the FDA’s policy on mifepristone left her clients facing a “Hobson’s choice”. Forcing doctors either to stand by their beliefs or care for a woman who took abortion pills and wound up in the emergency room, Ms Hawley said, is “intolerable”. Yet she faced deeply sceptical questioning from justices across the ideological spectrum as to whether her clients had suffered a concrete injury—a prerequisite for bringing a lawsuit in the first place.

Colloquy about “standing”, or a lack thereof, consumed perhaps three-quarters of the 90-minute hearing. Justices Elena Kagan and Amy Coney Barrett teamed up to demonstrate that even Ms Hawley’s two exemplars—Dr Christina Francis and Dr Ingrid Skop—had not suffered a concrete injury. Dr Francis may have had a patient who needed surgical attention after a complication from taking mifepristone, but she never raised an objection to treating her, Justice Kagan pointed out. And as Justice Barrett noted, it was actually her partner who performed the procedure, not Dr Francis herself: “I don’t read either Skop or Francis” as having “ever participated” in ending the life of a fetus or embryo.

The Alliance offered an alternative account of why the Alliance may have the right to sue—a theory known as “associational standing”. This is when an organisation brings a lawsuit based on harm to the organisation itself or to its members. Justice Clarence Thomas noted that it may be too “easy to manufacture” an injury rooted in an organisation’s bare opposition to a policy if all it has to show is “diverted time and resources” associated with bringing the lawsuit. Meanwhile, Justice Samuel Alito suggested that the court has been flexible with standing in past cases and seemed exasperated by the possibility that no one could come up with a plausible plaintiff. “Is there anybody who can sue and get a judicial ruling on whether what FDA did was lawful?” he asked. “Shouldn’t somebody be able to challenge that in court?” That’s quite unlikely, replied Elizabeth Prelogar, the solicitor-general who ably defended the FDA’s moves. But in any case, the plaintiffs in court don’t “come within a hundred miles” of the Supreme Court’s long-standing standards.

Several justices explored Ms Prelogar’s claim that federal law provides “conscience protections” that “would guard against the injury the doctors face”. Justices Barrett and Brett Kavanaugh seemed satisfied with her assurance that the government would not force a doctor with an objection to ending fetal life to participate in an abortion. Justice Ketanji Brown Jackson added that the “obvious common-sense remedy” is to give individual doctors “an exemption” (which they already have) rather than, as she said to Ms Hawley, to “entertain your argument that no one else…in America should have this drug in order to protect your clients”.

Justice Neil Gorsuch jumped on this suggestion. Single-judge district courts, he lamented, too often refashion themselves as “a nationwide legislative assembly” when blocking actions of the federal government. The judiciary’s proper role, he said, is to “provide a remedy sufficient to address the plaintiff’s asserted injuries and go no further”.

Two justices seem ready to go significantly further. Justices Alito and Thomas invoked the Comstock Act, a law from 1873 that bans sending, among other “lewd” things, abortion medications and materials through the post. In 2022 the White House’s Office of Legal Counsel said that this 150-year-old law only prohibits posting such materials to people who will use them unlawfully. But Justice Alito was incredulous that the FDA did not at least mention the law when regulating mifepristone. And Justice Thomas told Jessica Ellsworth, the lawyer for Danco Laboratories (which markets the drug as Mifeprex) that it “specifically covers drugs such as yours”.

If three more justices who were mum on this 19th-century law have a similar view, a future administration could succeed in banning the posting of abortion medication. But for now, it seems, the nearly 650,000 American women who end their pregnancies each year with abortion pills will not see their access curtailed.

Visitors outside the Supreme Court on March 26th saw just how convenient mifepristone can be. Foot-high “Roe-bots” whizzed around the plaza ready to distribute abortion pills by prescription. Controlled by doctors in Massachusetts, New York and Washington, the bots can do a virtual consultation with a remote provider and dispense the medication on demand. A volunteer with Aid Access, the charity which organised the demonstration, noted the Roe-bots were perfectly legal. “It’s all very by the book,” she said. 

Economics

Mohamed El-Erian says Trump tariffs risk US recession

Published

on

Mohamed Aly El-Erian, chief economic advisor for Allianz SE. 

Bloomberg | Getty Images

President Donald Trump’s extensive raft of import tariffs are putting the U.S. economy at risk of recession, Allianz’s Chief Economic Advisor Mohamed El-Erian warned on Friday.

He added that Trump’s swathe of so-called reciprocal tariffs could have a significant effect on the global economy.

“You’ve had a major repricing of growth prospects, with a recession in the U.S. going up to 50% probability, you’ve seen an increase in inflation expectations, up to 3.5%,” he told CNBC’s Silvia Amaro on the sidelines of the Ambrosetti Forum in Cernobbio, Italy.

“I don’t think [a U.S. recession] is inevitable because the structure of the economy is so strong, but the risk has become uncomfortably high.”

El-Erian also warned that markets were underestimating the inflation impact of the tariffs regime.

“The first reaction has been concerns about growth. We haven’t had two other reactions yet: what will happen to growth in other countries, and that makes a question mark on whether the dollar weakness will continue, and then what does the [Federal Reserve] do?” he questioned.

“I think if we’re lucky we’ll get one rate cut, not four, and it wouldn’t surprise me if we get none,” El-Erian added.

“If it’s a normal Fed — and I say this qualification with a lot of emphasis, because this has not been a normal Fed — we would unlikely to get even one rate cut.”

This developing story is being updated.

Continue Reading

Economics

U.S. tariff rates under Trump will be higher than the Smoot-Hawley levels from Great Depression era

Published

on

U.S. President Donald Trump holds a chart next to U.S. Secretary of Commerce Howard Lutnick as Trump delivers remarks on tariffs in the Rose Garden at the White House in Washington, D.C., on April 2, 2025.

Carlos Barria | Reuters

The tariff policy outlined by President Donald Trump on Wednesday appears set to raise the level of U.S. import duties to the highest in more than 100 years.

The U.S. introduced a baseline 10% tariff on imports, but also steep country-by-country rates on some major trading partners, including China. The country-by-country rates appear to be related to the trade deficit the U.S. has with each trading partner.

Sarah Bianchi, Evercore ISI chief strategist of international political affairs and public policy, said in a note to clients late Wednesday that the new policies put the effective tariff rate above the level of around 20% set by 1930’s Smoot-Hawley Tariff Act, which is often cited by economists as a contributing factor to the Great Depression.

“A very tough and more bearish announcement that pushes the overall U.S. weighted average tariff rate to 24%, the highest in over 100 years – and likely headed to as high as 27% once anticipated 232s are complete,” Bianchi wrote. The “232s” is a reference to some sector-specific tariffs that could be added soon.

JPMorgan’s chief U.S. economist Michael Feroli came up with similar results when his team crunched the numbers.

“By our calculations this takes the average effective tariff rate from what had been prior to today’s announcement around 10% to just over 23%. … A White House official mentioned that other section 232 tariffs (e.g. chips, pharma, critical minerals) are still in the works, so the average effective rate could go even higher. Moreover, the executive order states that retaliation by US trading partners could result in even higher US tariffs,” Feroli said in a note to clients.

More downside risk for the economy going forward, says Apollo Global's Torsten Slok

An estimate from Fitch Ratings was in the same range, with a report saying the tariff rate would hit its highest level since 1909.

Trump referenced the Smoot-Hawley Act in his Rose Garden remarks on Wednesday. The president said the issue was not the tariffs imposed in 1930 but the previous decision to remove the higher tariffs that existed earlier in the 20th century.

“It would have never happened if they had stayed with the tariff policy. It would have been a much different story. They tried to bring back tariffs to save our country, but it was gone. It was gone. It was too late,” Trump said.

The full economic impact of the new tariffs will likely depend on how long they are in place and if other countries retaliate. Trump and Treasury Secretary Scott Bessent have indicated that the country-by-country tariffs could come down if those trade partners change their policies.

JPMorgan global economist Nora Szentivanyi warned that Trump’s tariffs were likely to push the U.S. and global economy into a recession this year if they are sustained.

Continue Reading

Economics

The Federal Reserve is not likely to rescue markets and economy from tariff turmoil anytime soon

Published

on

U.S. Federal Reserve Chair Jerome Powell and U.S. President Donald Trump.

Craig Hudson | Evelyn Hockstein | Reuters

Now that President Donald Trump has set out his landmark tariff plans, the Federal Reserve finds itself in a potential policy box to choose between fighting inflation, boosting growth — or simply avoiding the fray and letting events take their course without intervention.

Should the president hold fast to his tougher-than-expected trade policy, there’s a material risk of at least near-term costs, namely the potential for higher prices and a slowdown in growth that could turn into a recession.

For the Fed, that presents a potential no-win situation.

The central bank is tasked with using its policy levers to ensure full employment and low prices, the so-called dual mandate of which policymakers speak. If tariffs present challenges to both, choosing whether to ease to support growth or tighten to fight inflation won’t be easy, as each courts its own peril.

“The problem for the Fed is that they’re going to have to be very reactive,” said Jonathan Pingle, chief U.S. economist at UBS. “They’re going to be watching prices rise, which might make them hesitant to respond to any growth weakness that materializes. I think it’s certainly going to make it very hard for them to be preemptive.”

Under normal conditions, the Fed likes to get ahead of things.

If it sees leading gauges of unemployment perk up, the Fed will cut interest rates to ease financial conditions and give companies more incentive to hire. If it sniffs out a coming rise in inflation, it can raise rates to dampen demand and bring down prices.

So what happens when both things occur at the same time?

Risks to waiting

The Fed hasn’t had to answer that question since the early 1980s, when then-Chair Paul Volcker, faced with such stagflation, chose to uphold the inflation side of the mandate and hike rates dramatically, tilting the economy into a recession.

In the current case, the choice will be tough, particularly coming on the heels of how the Jerome Powell-led central bank was flat-footed when prices started rising in 2021 and he and his colleagues dismissed the move as “transitory.” The word has been resurrected to describe the Fed’s general view on tariff-induced price increases.

“They do risk getting caught offsides with the potential magnitude of this kind of price increase, not unlike what happened in 2022 where, they might might feel the need to respond,” Pingle said. “In order for them to respond to weakening growth, they’re really going to have to wait until the growth does weaken and makes the case for them to move.”

To be sure, the Trump administration sees the tariffs as pro-growth and anti-inflation, though officials have acknowledged the potential for some bumpiness ahead.

“It’s time to change the rules and make the rules be stacked fairly with the United States of America,” Commerce Secretary Howard Lutnick told CNBC in a Thursday interview. ” We need to stop supporting the rest of the world and start supporting American workers.”

However, that could take some time as even Lutnick acknowledged that the administration is seeking a “re-ordering” of the global economic landscape.

Like many other Wall Street economists, Pingle spent the time since Trump announced the new tariffs Wednesday adapting forecasts for the potential impact.

Bracing for inflation and flat growth

The general consensus is that unless the duties are negotiated lower, they will take prospects for economic growth down to near-zero or perhaps even into recession, while putting core inflation in 2025 north of 3% and, according to some forecasts, as high as 5%. With the Fed targeting inflation at 2%, that’s a wide miss for its own policy objective.

“With price stability still not fully achieved, and tariffs threatening to push prices higher, policymakers may not be able to provide as much monetary support as the growth picture requires, and could even bind them from cutting rates at all,” wrote Seema Shah, chief global strategist at Principal Asset Management.

Traders, however, ramped up their bets that the Fed will act to boost growth rather than fight inflation.

As is often the reaction during a market wipeout like Thursday’s, the market raised the implied odds that the Fed will cut aggressively this year, going so far as to put the equivalent of four quarter-percentage-point reductions in play, according to the CME Group’s FedWatch tracker of futures pricing.

Shah, however, noted that “the path to easing has become narrower and more uncertain.”

Fed officials certainly haven’t provided any fodder for the notion of rate cuts anytime soon.

In a speech Thursday, Vice Chair Philip Jefferson stuck to the Fed’s recent script, insisting “there is no need to be in a hurry to make further policy rate adjustments. The current policy stance is well positioned to deal with the risks and uncertainties that we face in pursuing both sides of our dual mandate.”

Taking the cautious tone a step further, Governor Adriana Kugler said Wednesday afternoon — at the same time Trump was delivering his tariff presentation in the Rose Garden — that she expects the Fed to stay put until things clear up.

“I will support maintaining the current policy rate for as long as these upside risks to inflation continue, while economic activity and employment remain stable,” Kugler said, adding she “strongly supported” the decision in March to keep the Fed’s benchmark rate unchanged.

Get Your Ticket to Pro LIVE

Join us at the New York Stock Exchange!
Uncertain markets? Gain an edge with 
CNBC Pro LIVE, an exclusive, inaugural event at the historic New York Stock Exchange.

In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12.

Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!

Continue Reading

Trending