Can Trump 'order' companies to look 'for an alternative to China'?
When President Trump issued a series of four tweets in response to China's tariff threats Friday morning, Wall Street took a dive. As Matt Phillips of the New York Times wrote:
Stocks fell sharply on Wall Street on Friday after President Trump responded to China's threat of new tariffs on American imports with an angry volley of tweets, helping to push the market to its fourth-straight weekly loss.
The S&P 500 dropped 2.6 percent, while the technology-heavy Nasdaq index fell 3 percent. The Dow Jones industrial average declined 2.4 percent.
Investors were on edge before trading started after Beijing vowed to answer the Trump administration's next round of tariffs on Chinese goods by increasing tariffs on American imports.
Stocks opened trading lower after the announcement, but found their footing and began to move higher. Then, around 11 a.m., Mr. Trump took to Twitter.
You can see the dramatic effect on this chart:
Here are the tweets:
Our Country has lost, stupidly, Trillions of Dollars with China over many years. They have stolen our Intellectual Property at a rate of Hundreds of Billions of Dollars a year, & they want to continue. I won’t let that happen! We don’t need China and, frankly, would be far....— Donald J. Trump (@realDonaldTrump) August 23, 2019
....better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing..— Donald J. Trump (@realDonaldTrump) August 23, 2019
....your companies HOME and making your products in the USA. I will be responding to China’s Tariffs this afternoon. This is a GREAT opportunity for the United States. Also, I am ordering all carriers, including Fed Ex, Amazon, UPS and the Post Office, to SEARCH FOR & REFUSE,....— Donald J. Trump (@realDonaldTrump) August 23, 2019
....all deliveries of Fentanyl from China (or anywhere else!). Fentanyl kills 100,000 Americans a year. President Xi said this would stop - it didn’t. Our Economy, because of our gains in the last 2 1/2 years, is MUCH larger than that of China. We will keep it that way!— Donald J. Trump (@realDonaldTrump) August 23, 2019
Trump is clearly threatening a major break with China hours before he was to leave for the G-7 meeting in France, where he will have to opportunity to make the case for a united front to the six other largest advanced economies on the world (Germany, Japan, France, the U.K., Italy, and Canada), all of whom trade with China and face similar threats of Chinese intellectual property theft and predatory trade practices. China's open plan for global hegemony by 2019 is as threatening to them as it is for the United States.
But it was the language in tweets 2 and 3 that drew the most criticism:
Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing ... your companies HOME and making your products in the USA.
Trump does not have the authority to "duly order" companies to leave China, according to Jennifer Hillman, a Georgetown University law professor and trade expert at the Council on Foreign Relations.
He does have power under the International Emergency Economic Powers Act to prevent future transfers of funds to China, "but only if he has first made a lawful declaration that a national emergency exists," she said.
Of course, Trump was not ordering companies to "leave China," as Prof Hillman claims. He was ordering them to "start looking for an alternative to China."
Trump himself mentioned that very act in a tweet soon after the Post article was published:
For all of the Fake News Reporters that don’t have a clue as to what the law is relative to Presidential powers, China, etc., try looking at the Emergency Economic Powers Act of 1977. Case closed!— Donald J. Trump (@realDonaldTrump) August 24, 2019
The full text of the act is provided by the U.S. Treasury. The most relevant portions include the following:
United States Code Annotated
Title 50. War and National Defense
Chapter 35. International Emergency Economic Powers § 1701. Unusual and extraordinary threat; declaration of national emergency; exercise of Presidential authorities
(a) Any authority granted to the President by section 1702 of this title may be exercised to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat.
(b) The authorities granted to the President by section 1702 of this title may only be exercised to deal with an unusual and extraordinary threat with respect to which a national emergency has been declared for purposes of this chapter and may not be exercised for any other purpose. Any exercise of such authorities to deal with any new threat shall be based on a new declaration of national emergency which must be with respect to such threat.
No doubt, President Trump's opponents would litigate any invocation of this act, challenging his declaration that China's trade practices constitute "an unusual and extraordinary threat," just as they challenge him on many of his policies with which they disagree. But even the WaPo's expert, Prof. Hillman, notes:
Congress could terminate the declaration if it wishes, she said.
Whatever district court judge the judge-shoppers might find in the Ninth Circuit, eventually, if the case reaches the Supreme Court, the existence of a legislative remedy for any presidential overreach means that the broad "authorities" granted to the president are likely to be vindicated.
The specific powers granted to any president under the act could well make operating in China impossible
§ 1702. Presidential authorities
(a)(1) At the times and to the extent specified in section 1701 of this title, the President may, under such regulations as he may prescribe, by means of instructions, licenses, or otherwise—
(A) investigate, regulate, or prohibit—
(i) any transactions in foreign exchange,
(ii) transfers of credit or payments between, by, through, or to any banking institution, to the extent that such transfers or payments involve any interest of any foreign country or a national thereof,
(iii) the importing or exporting of currency or securities, by any person, or with respect to any property, subject to the jurisdiction of the United States;
(B) investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States ...
Now, it is true that these powers do not include ordering companies to "start looking for alternatives," but it is clear that he has powers that would make such a course of investigation necessary. So, President Trump is roughly as imprecise in his language as the expert the Washington Post invoked to challenge him. So, the short answer is that he can make is necessary for them to do so.