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During my family’s recent visit to Israel, we spent time with my brother in Haifa, who gave one of my daughters a “Guardians of Democracy” T-shirt worn by protesters who oppose the current government’s plans to constrain judicial power. We also spent time with my sister in Gush Etzion, a bloc of settlements near Jerusalem, who casually referred to such protesters as “anarchists.”

Those characterizations, each misleading in its own way, reflect a disagreement about the proper role of courts in a democracya debate that echoes familiar arguments in the United States. Israel’s version of that controversy, which has featured mass demonstrations that Prime Minister Benjamin Netanyahu sees as evidence of a nascent “civil war,” is flaring up again as the Knesset, Israel’s parliament, considers a bill that would bar the Israeli Supreme Court from blocking legislation based on a lack of “reasonableness.” That proposal, while less radical than bills that would virtually eliminate judicial review, encapsulates the issues raised by the determination of Netanyahu’s coalition partners to restrict the court’s authority.

Those issues, which go to the heart of legislative and judicial legitimacy, were illuminated 16 years ago by an exchange between Richard Posner, a now-retired judge on the U.S. Court of Appeals for the 7th Circuit, and Barak Medina, a senior lecturer in law at the Hebrew University in Jerusalem. Their debate centered on the judicial philosophy of Aharon Barak, who served as a justice of the Israeli Supreme Court from 1978 to 1995 and as its president from 1995 to 2006. That period included the “constitutional revolution” in which the court took on the task of enforcing limits imposed by Israel’s “basic laws.”

Barak is the bte noire of the right-wing legislators in Netanyahu’s coalition, who see themselves, contrary to their opponents’ take, as defenders of democracy against judicial usurpation. Barak “has brought disaster on Israel,” saysJustice Minister Yariv Levin. “His path stands in contrast to democracy. To him, judges are preferable to the people’s elected officials.”

In a 2007 review of Barak’s bookThe Judge in a Democracy, Posner offered a similar critique, portraying the Israeli jurist as an “enlightened despot” and “legal buccaneer” who overrode government policy based on his personal preferences. “Barak does not attempt to defend his judicial practice by reference to orthodox legal materials; even the ‘Basic Laws’ are mentioned only in passing,” Posner wrote in The New Republic. “His method, lacking as it does any but incidental references to enacted provisions, may seem the method of the common law (the judge-made law that continues to dominate many areas of Anglo-American law, such as contracts and torts), except that common-law rules are subject to legislative override, and his rules are not. The significance of this point seems to elude him. He takes for granted that judges have inherent authority to override statutes. Such an approach can accurately be described as usurpative.”

In particular, Posner took issue with Barak’s deployment of vague abstractions such as “reasonableness,” “justice,” and “equality,” which Posner called “as empty as they are lofty,” to second-guess the choices of elected representatives. As Posner saw it, that “lawless” method invited unjustified interference with the democratic process.

To illustrate the arbitrariness he saw as characteristic of Barak’s approach, Posner cited “a ruling made during the Gulf war in 1991 requiring the Israeli army to distribute more gas masks to residents of the West Bank.” Defending that decision, Barak said: “We did not intervene in military considerations, for which the expertise and responsibility lie with the executive. Rather, we intervened in considerations of equality, for which the expertise and responsibility rest with the judiciary.”

Although the basic laws do not explicitly mention equality, the Israeli Supreme Court has deemed that principle implicit in the “human dignity” protected by the 1992 basic law. Yet Barak’s book “strongly commends the balancing of competing interests as a technique of judicial decision-making,” Posner said, “implying that in the gas-mask case the court should have balanced against considerations of equality whatever military reasons the army gave for distributing fewer gas masks on the West Bank than in Israel proper, such as that Iraq was more likely to aim its missiles at Jews than at Arabs.” The general test, according to Barak, is whether “a reasonable person responsible for security would be prudent to adopt the security measures that were adopted.”

Medina’s rejoinder to Posner, published the same year in the Harvard International Law Journal, faulted the American judge for misrepresenting the Israeli system of government. Contrary to Posner’s assertion that the Israeli Supreme Court’s decisions are not “subject to legislative override,” Medina noted, the Knesset can change the basic laws at will, typically by a simple majority vote. Somewhat contradictorily, Medina also objected to Posner’s assertion that “Israel does not have a constitution.” He noted that “the constitutional assembly chosen to draft a Constitution decided, soon after its election, to also serve as the legislature,” and “it established explicitly that all future Knessets will have ‘all the powers’ given to the First Knesset.”

Treating the basic laws as a constitution, Medina argued, “is based upon the recognition of the importance of judicial review in ensuring respect for basic human rights” and “protecting the fundamental principles of the State of Israel as a democratic and Jewish state.” He said that “appropriate compromise” also recognizes that “it is best to base judicial review upon explicit consent of the people, via its representatives in Knesset.”

Medina emphasized that the Knesset had accepted judicial review based on the basic laws. “The Knesset did not amend the Basic Laws in response to the Court’s decision regarding the ‘constitutional revolution,’ and refrained from limiting the Court’s power to practice judicial review over legislation,” he wrote. “Moreover, in recent years, the Knesset usually examines proposed legislation to ensure its accordance with the Basic Laws, recognizing the supremacy of the provisions of the Basic Laws over ‘regular’ legislation. The Knesset accepted, by a clear consensus, the Court’s decisions in which it voided provisions in legislation which violated the Basic Laws.”

As demonstrated by the ongoing clash over judicial review, that “clear consensus” has broken down. And the fact that the basic laws were enacted by the national legislature, which retains the power to alter them, makes those ground rules strikingly different from the U.S. Constitution, which by design is very difficult to change. While Medina surely is correct that judicial review is essential in “ensuring respect for basic human rights,” empowering the legislature to determine the content of those rights obviously makes them less secure than they would be in a system where the amendment process is more arduous and complicated. That is especially true under a governing scheme like Israel’s, which lacks the checks and balances achieved through an autonomous lower level of government and separation of legislative and executive powers.

In this context, judicial review is both more important and more precarious than it is in the United States. At the same time, the legitimacy of that power is open to question when courts go beyond interpreting and applying the law. According to Posner, that is what Barak’s approach demands.

Medina argued that Posner grossly exaggerated the extent to which the Israeli Supreme Court interfered with executive and legislative choices. He noted that the government and the Knesset had made many momentous decisionsincluding “the economic program of 1985, the expansion of the settlements in the Occupied Territories, the invasion into Lebanon and the withdrawal from Lebanon, the Oslo peace Accords, the policy of privatization, the increases and subsequent decreases in stipeds for families with children, the disengagement from Gaza, Operation Desert Shield against Palestinian terror organizations, the construction of the Separation Wall, changes in Israel’s immigration policy, [and] the policy adopted in the Second Lebanon War”without “significant intervention by the Court.”

Medina added that the court had not responded to “governmental inactions” in areas such as “measures to close widening economic gaps in society and the deepening of poverty,” “discrimination by private agents against Arab citizens,” and “delays in decisions to desalinate water and to recycle materials.” He noted that the court “did not instruct the Government to adopt a policy of affirmative action in order to contend with inequality,” “did not instruct the State to set up soup kitchens or subsidize lifesaving drugs,” “did not prevent discriminatory security checks of Arab citizens in airports,” and “did not even examine the constitutionality of the decision not to draft Arabs into the Israel Defense Forces.”

While some of these policies raise issues that are plausibly related to provisions of Israel’s basic laws and/or resemble constitutional claims that might be brought in U.S. courts, many of them seem far afield from such concerns. Medina nevertheless implied that the Israeli Supreme Court could have intervened in all of these areas, including large chunks of social and economic policy, but chose not to do so, perhaps because it worried about the potential for the sort of political backlash it now faces. It is precisely this open-endedness to which Posner objected: When judges reject or mandate government policies without “reference to orthodox legal materials,” he argued, they are usurping the role of legislators.

Medina did not really have a response to that objection, except to suggest that judges unavoidably act as legislators while pretending otherwise, a point he said Posner’s own preferred judicial method concedes. “According to [Posner’s] philosophy, a judge should ignore deontological limitations, for instance the recognition of values such as the dignity of man or tolerancea view which is in line with his critique of Barak,” Medina wrote. “However, Posner does not maintain that morality is irrelevant for judicial decision. In fact, the opposite is true: Posner believes that the judicial decision should be basedentirelyupon a moral approach that he calls ‘legal pragmatism.'”

Under that approach, Medina said, “a judge should render his decision by calculating the anticipated social ramifications of the application of each of the possible interpretations in the given case (though the nature of the calculation is unclear). Even if one were to ignore the difficulties in implementing such an eclectic approach, it is clear that this approach conforms with the position that a judge’s decision should ensure the greatest harmony between the law and (a certain definition of) the social good. The fact that Posner believes that the correct moral approach is consequentialism (and not deontology) does not make his approach any more legitimate than that which Barak espouses; thus his harsh critique of Barak’s approach is astounding.”

Even by Medina’s account, however, legal pragmatism comes into play when a judge chooses between “possible interpretations” of the law, which requires an intelligible principle that arguably can be applied in different ways. According to the basic law that the Knesset enacted in 1992, for example, “every person has a right to privacy and to intimacy.” That right includes restrictions on searches of “private premises” and protection for “the confidentiality of conversation” and of “writings or records.” On its face, that guarantee is broader than the U.S. Constitution’s privacy protections, and it is clearly relevant in search and seizure cases.

Medina mentioned various other ways in which the basic laws have been construed to protect “fundamental rights of the individual.” He noted decisions “voiding the government’s decision to prevent the participation of certain parties and candidates in elections,” “enforcing the prohibition against discrimination against Arab citizens in the distribution of state land,” “enforcing the prohibition against discrimination against women in a variety of contexts,” “protecting freedom of speech,” “prohibiting the use of harmful meansincluding torturein investigations of those suspected of terror activities,” and “prohibiting the use of military methods that cause ‘disproportionate’ harm to citizens.”

Those cases involved disputes that implicate widely recognized civil liberties. Not so the hypothetical decisions that Medina imagined, which involved issues such as recycling, desalination, pharmaceutical subsidies, and welfare programs to address “widening economic gaps.”

Medina also noted that Israeli “judicial activism” has included “relatively great involvement in ensuring the proper functioning of politics (predominately
restricting those who are suspected of breaking the law from serving in public office, barring someone from public office when there is a conflict of interest, and so forth).”The New York Times cites a recent example: Israeli judges invoked “reasonableness” to “bar Aryeh Deri, a veteran ultra-Orthodox politician, from serving in Prime Minister Benjamin Netanyahu’s cabinet. They said it was unreasonable to appoint Mr. Deri because he had recently been convicted of tax fraud.”

The bill that the Knesset is taking up this week targets decisions based on “reasonableness,” which the Times describes as a “flexible and contentious legal standard that currently lets the court intervene in governance.” Under that standard, the paper says, “a decision is deemed unreasonable if a court rules that it was made without considering all relevant factors or without giving relevant weight to each factor, or by giving irrelevant factors too much weight.”

That sort of analysis seems indistinguishable from the judgments that legislators themselves are charged with making. It is not hard to understand why critics would argue that the “reasonableness” standard invites judges to overstep their proper authority. The question is whether Israel can curb such unbridled discretion without compromising the rights that the Knesset has promised to respect.

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Trump trade war escalation sparks global market sell-off

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Trump trade war escalation sparks global market sell-off

Donald Trump’s trade war escalation has sparked a global sell-off, with US stock markets seeing the biggest declines in a hit to values estimated above $2trn.

Tech and retail shares were among those worst hit when Wall Street opened for business, following on from a flight from risk across both Asia and Europe earlier in the day.

Analysis by the investment platform AJ Bell put the value of the peak losses among major indices at $2.2trn (£1.7trn).

The tech-focused Nasdaq Composite was down 5.8%, the S&P 500 by 4.3% and the Dow Jones Industrial Average by just under 4% at the height of the declines. It left all three on course for their worst one-day losses since at least September 2022 though the sell-off later eased back slightly.

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Analysts said the focus in the US was largely on the impact that the expanded tariff regime will have on the domestic economy but also effects on global sales given widespread anger abroad among the more than 180 nations and territories hit by reciprocal tariffs on Mr Trump‘s self-styled “liberation day”.

They are set to take effect next week, with tariffs on all car, steel and aluminium imports already in effect.

Price rises are a certainty in the world’s largest economy as the president’s additional tariffs kick in, with those charges expected to be passed on down supply chains to the end user.

The White House believes its tariffs regime will force employers to build factories and hire workers in the US to escape the charges.

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The latest numbers on tariffs

Economists warn the additional costs will add upward pressure to US inflation and potentially choke demand and hiring, ricking a slide towards recession.

Apple was among the biggest losers in cash terms in Thursday’s trading as its shares fell by almost 9%, leaving it on track for its worst daily performance since the start of the COVID pandemic.

Concerns among shareholders were said to include the prospects for US price hikes when its products are shipped to the US from Asia.

Other losers included Tesla, down by almost 6% and Nvidia down by more than 6%.

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PM: It’s ‘a new era’ for trade and economy

Many retail stocks including those for Target and Footlocker lost more than 10% of their respective market values.

The European Union is expected to retaliate in a bid to put pressure on the US to back down.

The prospect of a tit-for-tat trade war saw the CAC 40 in France and German DAX fall by more than 3.4% and 3% respectively.

The FTSE 100, which is internationally focused, was 1.6% lower by the close – a three-month low.

Financial stocks were worst hit with Asia-focused Standard Chartered bank enduring the worst fall in percentage terms of 13%, followed closely by its larger rival HSBC.

Among the stocks seeing big declines were those for big energy as oil Brent crude costs fell back by 6% to $70 due to expectations a trade war will hurt demand.

The more domestically relevant FTSE 250 was 2.2% lower.

A weakening dollar saw the pound briefly hit a six-month high against the US currency at $1.32.

There was a rush for safe haven gold earlier in the day as a new record high was struck though it was later trading down.

Sean Sun, portfolio manager at Thornburg Investment Management, said of the state of play: “Markets may actually be underreacting, especially if these rates turn out to be final, given the potential knock-on effects to global consumption and trade.”

He warned there was a big risk of escalation ahead through countermeasures against the US.

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Sandra Ebner, senior economist at Union Investment, said: “We assume that the tariffs will not remain in place in the
announced range, but will instead be a starting point for further negotiations.

“Trump has set a maximum demand from which the level of tariffs should decrease”.

She added: “Since the measures would not affect all regions and sectors equally, there will be winners and losers as in 2018 – although the losers are more likely to be in the EU than in North America.

“To protect companies in Europe from the effects of tariffs, the EU should not respond with high counter-tariffs. In any case, their impact in the US is not likely to be significant. It would be more efficient to provide targeted support to EU companies in the form of investment and stimulus.”

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British businesses issue warning over ‘deeply troubling’ Trump tariffs

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British businesses issue warning over 'deeply troubling' Trump tariffs

British companies and business groups have expressed alarm over President Donald Trump’s 10% tariff on UK goods entering the US – but cautioned against retaliatory measures.

It comes as Business Secretary Jonathan Reynolds launched a consultation with firms on taxes the UK could implement in response to the new levies.

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A 400-page list of 8,000 US goods that could be targeted by UK tariffs has been published, including items like whiskey and jeans.

On so-called “Liberation Day”, Mr Trump announced UK goods entering the US will be subject to a 10% tax while cars will be slapped with a 25% levy.

The government’s handling of tariff negotiations with the US to date has been praised by representative and industry bodies as being “cool” and “calm” – and they urged ministers to continue that approach by not retaliating.

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Business lobby group the CBI (Confederation of British Industry) said: “Retaliation will only add to supply chain disruption, slow down investment, and stoke volatility in prices”.

Industry body the British Retail Consortium (BRC) also cautioned: “Retaliatory tariffs should only be a last resort”.

‘Deeply troubling’

While a major category of exports, in the form of services – like finance and information technology (IT) – has been exempted from the tariffs, the impact on UK business is expected to be significant.

Mr Trump’s announcement was described as “deeply troubling for businesses” by the CBI’s chief executive Rain Newton-Smith.

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The Federation of Small Businesses (FSB) also said the tariffs were “a major blow” to small and medium companies (SMEs), as 59% of small UK exporters sell to the US. It called for emergency government aid to help those affected.

“Tariffs will cause untold damage to small businesses trying to trade their way into profit while the domestic economy remains flat,” the FSB’s policy chair Tina McKenzie said. “The fallout will stifle growth” and “hurt opportunities”, she added.

Companies will need to adapt and overcome, the British Export Association said, but added: “Unfortunately adaptation will come at a cost that not all businesses will be able to bear.”

Watch dealer and component seller Darren Townend told Sky News the 10% hit would be “painful” as “people will buy less”.

“I am a fan of Trump, but this is nuts,” he said. “I expect some bad months ahead.”

Industry body Make UK said the 25% tariffs on cars, steel and aluminium would in particular be devastating for UK manufacturing.

Cars hard hit

Carmakers are among the biggest losers from the world trade order reshuffle.

Auto industry body the Society of Motor Manufacturers and Traders (SMMT) said the taxes were “deeply disappointing and potentially damaging measure”.

“These tariff costs cannot be absorbed by manufacturers”, SMMT chief executive Mike Hawes said. “UK producers may have to review output in the face of constrained demand”.

The new taxes on cars took effect on Thursday morning, while the measures impacting car parts are due to come in on 3 May.

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Trump trade war: The blunt calculation that should have spared UK from reciprocal tariffs

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Trump trade war: The blunt calculation that should have spared UK from reciprocal tariffs

Economists immediately started scratching their heads when Donald Trump raised his tariffs placard in the Rose Garden on Wednesday. 

On that list he detailed the rate the US believes it is being charged by each country, along with its response: A reciprocal tariff at half that rate.

So, take China for example. Donald Trump said his team had run the numbers and the world’s second-largest economy was implementing an effective tariff of 67% on US imports. The US is responding with 34%.

Trump latest: UK considers tariff retaliation

How did he come up with that 67%? This is where things get a bit murky. The US claims it studied its trading relationship with individual countries, examining non-tariff barriers as well as tariff barriers. That includes, for example, regulations that make it difficult for US exporters.

However, the actual methodology appears to be far cruder. Instead of responding to individual countries’ trade barriers, Trump is attacking those enjoying large trade surpluses with the US.

A formula released by the US trade representative laid this bare. It took the US’s trade deficit in goods with each country and divided that by imports from that country. That figure was then divided by two.

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So, in the case of China, which has a trade surplus of $295bn on total US exports of $438bn, that gives a ratio of 68%. The US divided that by two, giving a reciprocal tariff of 34%.

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This is a blunt measure which targets big importers to the US, irrespective of the trade barriers they have erected. This is all part of Donald Trump’s efforts to shrink the country’s deficit – although it’s US consumers who will end up paying the price.

But what about the small number of countries where the US has a trade surplus? Shouldn’t they actually be benefiting from all of this?

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That includes the UK, with whom the US has a surplus (by its own calculations) of $12bn. By its own reciprocal tariff formula, the UK should be benefitting from a “negative tariff” of 9%.

Instead, it has been hit by a 10% baseline tariff. Number 10 may be breathing a sigh of relief – the US could, after all, have gone after us for our 20% VAT rate on imports, which it takes issue with – but, by Trump’s own measure, we haven’t got off as lightly as we should have.

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