This article was published by The McAlvany Intelligence Advisor on Monday, August 26, 2019:
The New York Times even got its headline wrong: “Trump Asserts He Can Force U.S. Companies to Leave China.” The Times declared that Trump’s tweet storm on Friday “represented the latest audacious assertion of power by a president who has repeatedly crossed lines his predecessors did not. While he took office criticizing President Barack Obama for exceeding his authority, Mr. Trump has gone even further in finding creative ways to take action on his priorities.”
None of this is remotely accurate. The truth of the matter is that the president is restraining his use of powers Congress gave up to the Executive branch decades ago! Rather than “asserting” powers that he doesn’t have, or finding “creative ways” to expand his powers, the president is restraining the use of powers residing in the office of the Presidency when he arrived in January 2017.
Here’s what the president tweeted on Friday:
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 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.
And then he added:
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.
When the media jumped all over him, claiming he was assuming powers he didn’t have, Trump responded:
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!
That act, more accurately called the International Emergency Economic Powers Act of 1977, or IEEPA, signed into law by President Jimmy Carter, authorizes the president to declare the existence of a national emergency when there exists an “unusual and extraordinary threat … to the national security, foreign policy, or economy of the United States,” which threat is present “in whole or substantial part outside the United States.”
The law has teeth. It authorizes the president, once he has declared that emergency, the power to block transactions and freeze assets to deal with and neutralize that threat. That would include, one assumes, the power to force U.S. companies to leave China.
The law limits the power of the executive branch given to it by Congress back in 1917 (the Trading with the Enemy Act, or TWEA). Prior to passage of the IEEPA, the Executive branch had the power to declare emergencies without limiting their scope or duration, without having to cite relevant statutes, and without Congressional oversight.
However, those limitations have not restrained previous administrations, which have, since 1977, invoked IEEPA more than 50 times, with 29 of them still in force. In fact, the first use of IEEPA occurred in 1979, when an emergency was declared in response to the taking of the U.S. embassy staff as hostages by Iran. That national emergency remains in force today.
What should be noted is the remarkable restraint President Trump has shown in not using IEEPA more often! On Sunday, during CNN‘s “State of the Union” broadcast, White House economic advisor Larry Kudlow made that point crystal clear:
Ultimately [the president does have] such authority, but it is not going to be exercised presently. What [the president] is suggesting to American businesses … something he has said to many companies in many different forms and on many different occasions … you ought to think about moving your operations and your supply chains away from China….
We would like to you come back home. Come back to the U.S.A. where we have very low corporate tax rates and massive deregulation programs … come back to America.
Treasury Secretary Steve Mnuchin reiterated the point on Fox News on Sunday: “I think what [the president] is saying is he’s ordering companies to start looking. He wants to make sure [that] to the extent that we are in an extended trade war, that [U.S.] companies don’t have these issues [and to consider now] a move out of China.”
The president himself is on record as saying that he has the power but doesn’t want to use it. He told reporters on Sunday that, “If I want, I could declare a national emergency. In many ways [the theft of intellectual property by the Chinese is] an emergency [but] I have no plans [to declare one] right now.”
That’s the story that the Times and others missed. His “order” for U.S. companies to start looking to relocate out of China isn’t an “audacious assertion of power,” nor is he “exceeding his authority.” He is not “finding creative ways” to accomplish his agenda. Instead he is restraining the use of powers that Congress gave up to the Executive branch decades ago. He is hoping instead that the increasing pressure of tariffs on China will bring them to the negotiating table. That pressure will hasten the day when fair trade can be enacted and enforced through an agreement with that rogue nation so that this power residing in the office of the presidency won’t be needed.
Call it his “trump” card, if you will: nice to have in your hand when dealing in a high-stakes game with criminals who only respect power. But only to be used as a last resort.
The New York Times: Trump Asserts He Can Force U.S. Companies to Leave China
The New York Post: Rising tariffs, tanking stocks: Inside Trump’s trade battle with China
News.Trust.org: Trump presses U.S. companies to close China operations
The Wall Street Journal: Trump Gambles That China Trade War Will Pay Off in 2020
The Wall Street Journal: Trump Aides Say He Isn’t Ordering U.S. Companies Out of China