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Supreme Court’s EPA ruling a ‘bombshell’ for regulatory policy, strategist says

AGF Investments Chief U.S. Policy Strategist Greg Valliere joins Yahoo Finance Live to discuss Supreme Court regulations, President Biden looking to temporarily lift tariffs on Chinese imports, inflation, and the outlook for oil.

Video transcript

JARED BLIKRE: All right, moving on and sticking with the latest in DC, our next guest says the Supreme Court's decision to strike down the Biden administration's regulations on emission, this potentially has enormous implications for other regulatory agencies. And joining us to discuss this is Greg Valliere, AGF Investments Chief US Policy Strategist.

And Greg, always great to see you here. You heard what Kevin was talking about. But you have some additional insights here into this latest SCOTUS decision. And I have to ask, have we reached peak bureaucracy? And realistically, how much could we hope to roll back?

GREG VALLIERE: I think quite a bit. And great to see you again.

This was an enormously important decision, eclipsed obviously, by the abortion ruling. But a lot of people who follow regulatory policy consider this to be a bombshell. And basically, as you know, what the Supreme Court said was that on environmental rules, you could not just have the EPA make this decision. It had to be done with congress.

And if you apply that standard to other issues, you could be talking about the Securities and Exchange Commission with Gary Gensler. You could be talking about the Federal Trade Commission. If they try to regulate and people who don't like the regulations sue and it goes all the way to the Supreme Court, the Supreme Court could uphold the rulings in favor of business, a huge decision.

JARED BLIKRE: Well, let me ask you, we just saw a huge fallout from the overturn of Roe v Wade. We have a number of state laws that have taken over in the wake of this. I'm just wondering, if we were to have another big decision at the SCOTUS level regarding regulation, regarding the build out of the bureaucratic state, is there a potential fallout with unknown ramifications that we could see that's similar?

GREG VALLIERE: I suppose. If you tell the SEC they can't go after corporate executives on transparency unless they work with Congress, I guess my initial take would be they better work with Congress. But yes, I suppose there could be a real confusion in the business world if we got to that point.

JARED BLIKRE: And let me shift gears here and go back to something the previous guest, Kevin, was talking about, and that's the potential rollback of Chinese tariffs. And I was surprised. I had to think about it. Yes, it's been four years. Almost seems like a different age because it was so different. But there still here. And what could this possibly bring toward economic relief?

GREG VALLIERE: I'd like to say it's a big deal. But in terms of the inflation impact, it's a few tenths of 1%. But when we've got an inflation rate of 8%, that's not a lot. But at the same time, I'm encouraged that maybe the US and China are getting a little closer after this acrimony we've had for several years.

We'll have to wait and see. But I think that this will be one of these split the difference decisions where the president will have to do something that organized labor likes, but he's going to have to do something that Janet Yellen likes. So you'll get something, but I don't think it's going to be a game changer.

JARED BLIKRE: Well, and you're writing about another controversy with respect to China. This would be the stalled US Innovation and Competition Act. This includes $52 billion for us semiconductor manufacturers to compete with China, but it's being locked up in the Senate, I believe, right now.

GREG VALLIERE: Yeah. I had thought, like most people, that this bill would make it. Chuck Schumer is the big proponent. It would give an enormous amount of money to chip manufacturers here in the US. But suddenly last week, Mitch McConnell said no, that he would not go along with this because the Democrats are trying to jam through the remnants of Build Back Better, which includes prescription drug price controls. McConnell says no. And if he says no, we might not even get that bill.

JARED BLIKRE: And I want to ask you about the price of crude oil and the potential here for any actions on the Biden administration because breaking news, WTI just slipped below $100 per barrel for the first time in quite a while that I'm seeing. Is there anything that Biden can do heading into the midterm elections to really lower the price of oil, or is he simply out of bullets?

GREG VALLIERE: He's pretty much out of bullets. I thought his call for a tax holiday on gasoline was a stunt. And it's never going to make it through Congress. That's pretty clear. He'll go to Saudi Arabia in a couple of weeks. That might have some impact.

But no, what's going to bring the prices down of all these commodities is an economic slowdown. And that's exactly what we're seeing in the markets right now.

JARED BLIKRE: Well, and this is all potentially a tailwind for the Republicans. And now you have President Trump perhaps, well, maybe more than perhaps running for president in 2024. A lot of Republicans up in arms here, as you're writing about as well. How are you seeing this shake out?

GREG VALLIERE: Well if Trump announces in August, and that's the rumor right now, that would infuriate Republicans who thought they had a clear path to taking at least the House on November 8, maybe even the Senate. But if you have Donald Trump stomping on their message, making the election all about Donald Trump, that's going to really complicate things for the Republicans.

They don't want to relitigate the last election. The Republicans want to move forward. And Trump is going to complicate matters.

JARED BLIKRE: And we've got to leave it there. Always appreciate you stopping by, Greg Valliere of AGF Investments.