Issues to Watch

Trade War Tweets: Is a Mandate by the President to Order American Companies to Find Alternatives to Chinese Companies a Valid Presidential Power Under the Emergency Economic Powers Act?


Jenna McGreevy*

President Donald Trump started a Twitter storm on the morning of Friday, August 23, 2019, that continued into the late evening as a new attempt to address the ongoing trade war with China.  See Donald J. Trump (@realDonaldTrump), Twitter (Aug. 23, 2019, 10:59 AM), https://twitter.com/realDonaldTrump/status/1164914960046133249.  This series of tweets, a common form of communication used by the current President with the American people, caught the attention of many as it issued a new set of “orders” to all American businesses.  See id.  Specifically, President Trump “hereby ordered [American companies] to immediately start looking for an alternative to China.”  Id.

While many questioned the President’s ability to implement the order, President Trump supported the claim’s legality stating: “For all of the Fake News Reporters that don’t have a clue as to what the law is relative to Presidential powers . . . try looking at the Emergency Economic Powers Act of 1977. Case Closed!”  Donald J. Trump, (@realDonaldTrump), Twitter (Aug. 23, 2019, 8:58 PM), https://twitter.com/realDonaldTrump/status/1165111122510237696.  Discussion immediately ensued in the legal community over whether the Emergency Economic Powers Act of 1977 (the Act) provides President Trump with the power to order companies to discontinue business with China and if it does, how far that power truly extends.  See Anya van Wagtendonk, Trump “Ordered” US Companies out of China. Despite Claiming Otherwise, He Can’t Do That., Vox (Aug. 24, 2019, 11:19 AM), https://www.vox.com/2019/8/24/20830954/trade-war-donald-trump-china-hereby-order-us-companies-tariffs-economic-powers-act-1977.

From the Iranian hostage crisis of 1979 to the use of chemical and biological weapons, the Act remains a resource for a president “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.”  Christopher A. Casey et al., Cong. Research Serv., The International Emergency Economic Powers Act: Origins, Evolution, and Use 10 (2019) (quoting 50 U.S.C. § 1701).  Since the Act was enacted in 1977, it has been invoked by presidents fifty-four times.  Id. at 17.  While most declarations were used in response to specific governments, the current more globalized world has made it more common for presidents to use the Act’s power to assist with a range of issues from cyber-attacks to global terrorism.  Id.

More recently, President Trump threatened to invoke the Act to address his perceived ongoing issues with illegal immigration at the border between the United States and Mexico.  See Zeke Miller, Powerful, Obscure Law is Basis for Trump ‘Order’ on Trade, AP News (Aug. 25, 2019), https://www.apnews.com/be18b8619cde4658a418dda4f416968a.  Although President Trump’s threat never came to fruition, last May he suggested invoking the Act to unilaterally place restrictions on all trade with Mexico, citing national security concerns.  See Alex Lawson, Trump Hikes Tariffs, Urges US Cos. to Leave China, Law 360 (Aug. 23, 2019, 2:26 PM) https://www.law360.com/articles/1192029.  While continually referring to the Act to suggest possible solutions to the ongoing issues with immigration, the Trump Administration asserts that it is unlikely that the President will actually use the Act to address relations with Mexico.  See id.

However, President Trump once again named the Act as a way to “order” American companies to find alternatives to China due to China’s announcement of new tariffs on U.S. goods in response to the new U.S. tariffs on Chinese goods.  See van Wagtendonk, supra.  Regardless of President Trump’s eventual actions, his recent citing of the Act to address the ongoing trade war with China reinvigorated discussions of what constitutes a sufficient international issue for a president to properly invoke the power under the Act.  Id.

To move forward with these actions, President Trump would first need to declare a national emergency regarding Chinese trade.  See Peter Baker & Keith Bradsher, Trump Asserts He Can Force U.S. Companies to Leave China, N.Y. Times (Aug. 24, 2019), https://www.nytimes.com/2019/08/24/world/europe/trump-g7-summit.html.  Such a move, made in anticipation of invoking the Act’s power, is generally reserved for instances of extreme national security threats.  Id.  In this instance, using the Act to order companies to halt business in China would be a large divergence from the historical use of this law, which often was in response to national security threats from specific governments.  Id.

President Trump’s inclination to invoke this rule any time he wants to unilaterally make a decision also deviates from the Act’s original purpose.  Id.  While generally reserved for national security threats, some fear using the act to make unilateral decisions will become a “completely different use of a well-utilized tool in going after what appears to be a purely economic dispute.”  Id.  Conversely, some international lawyers claim that the language of the law is broad enough to grant the President the ability to do anything he wishes as long as the President first declares a national emergency to the United States.  Id.

With Congress currently in recess, it is not clear what impact the President’s Twitter declaration will have on the United States or the ongoing trade issues with China.  Id.  If the President moves forward with his declaration, Congress can terminate a national emergency declaration by passing a joint resolution.  See Veronica Stracqualursi, Trump Claims He Has ‘Absolute Right’ to Order US Companies out of China Under 1977 Law, CNN (Aug. 24, 2019, 12:17 PM), https://www.cnn.com/2019/08/24/politics/trump-china-trade-war-emergency-economic-powers-act/index.html.

Should President Trump declare a national emergency as a method of economic warfare, challenges in court or by Congress could ultimately result.  See Baker, supra.  If used, this could have strong repercussion on the trade war with China, a lasting impact on the global economy, and create new precedent regarding the extent the President may invoke this Act.

*Jenna McGreevy is a second-year evening law student at the University of Baltimore School of Law and is a Staff Editor for the University of Baltimore Law Review. In addition, Jenna works full time as the Legislative Director for Maryland Senate President Thomas V. Mike Miller, Jr.

 

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