BIARRITZ, France – President Donald Trump asserted Saturday that he has the authority to make good on his threat to force all U.S. businesses to leave China, citing a national security law that has been used mainly to target terrorists, drug traffickers and pariah states like Iran, Syria and North Korea.
As he arrived in France for the annual meeting of the Group of 7 powers, Trump posted a message on Twitter citing the International Emergency Economic Powers Act of 1977, a law originally meant to enable a president to isolate criminal regimes, not sever economic ties with a major trading partner over a tariff dispute.
“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,” Trump wrote. “Case closed!”
The president’s threat to all but cut off one of America’s most important trading relationships could disrupt a global economy already on the edge of recession amid his trade war while further unsettling giant companies in the U.S. that rely on China in their production and sale of products ranging from clothing to smartphones.
Trump has often made drastic threats as a negotiating ploy to force a partner to offer concessions, as when he vowed to close the border with Mexico or impose tariffs on its goods to force action to halt illegal immigration.
But if he were to follow through, it would be the most significant break with China since President Richard Nixon’s diplomatic opening to Beijing in the early 1970s.
Trump’s claim that he has the power to order U.S. companies to pull out of China also represents the latest assertion of authority by a president who has repeatedly crossed lines that his predecessors have not.
While he came to office criticizing President Barack Obama for exceeding the power of his office, Trump has gone even further in creative ways to take action on his priorities.
“Any invocation of the International Emergency Economic Powers Act in these circumstances and for these purposes would be an abuse,” said Daniel Price, a former international economic adviser to President George W. Bush. “The act is intended to address extraordinary national security threats and true national emergencies, not fits of presidential pique.”
Under the weight of Trump’s tariff war, China has already fallen from being the United States’ largest trading partner last year to the third-largest this year.
The U.S. remains China’s largest trading partner. China said Friday that it would raise tariffs on U.S. goods in retaliation for Trump’s latest levies, and the president vowed hours later to increase tariffs even further.
China’s commerce ministry issued a strongly worded statement Saturday warning the United States to turn back from ever-escalating confrontation, but it did not threaten any new trade measures.
“This unilateral and bullying trade protectionism and extreme pressure violate the consensus of the heads of state of China and the United States, violate the principle of mutual respect, equality and mutual benefit, seriously undermine the multilateral trading system and the normal international trade order,” the Chinese said.
U.S. leaders in China said Saturday that forcing U.S. companies to leave the country would hurt the competitiveness of U.S. industry and could cause heavy financial losses.
“It’s difficult to move out of China, and any time they are forced to do so by tariffs, this is a momentous act and is not in response to efficiency,” said Ker Gibbs, president of the American Chamber of Commerce in Shanghai.
‘Too large, too important’
“When we see the president tweet something like that, we are in no position to give up the China market — it’s too large, it’s too important,” Gibbs said.
Business leaders said that if U.S. firms were forced by Washington to leave China, the result could be a series of fire sales at reduced prices. Companies from other countries, especially in Europe, would snap up the businesses on sale, and it could be hard for the U.S. to re-enter the market later.
In raising the possibility of forcing U.S. businesses to pull out of China on Friday, Trump framed it not as a request but as an order he had already issued.
“Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing our companies HOME and making your products in the USA,” he wrote on Twitter, adding, “We don’t need China and, frankly, would be far better off without them.”
In fact, aides said, no order has been drawn up nor was it clear that he would attempt to do so. For the moment, they said he was trying to send a message to U.S. businesses that they should begin to disentangle from China on their own.
But it accompanied a radical shift in his assessment of President Xi Jinping of China. In the past, he has effusively praised Xi and described him as a friend, taking the Chinese leader at his word that he would stem the flow of fentanyl to the U.S. In the past two days, he has accused Xi of not living up to his fentanyl pledge and described the Chinese leader as an “enemy.”
Andy Mok, a trade and geopolitics analyst at the Center for China and Globalization in Beijing, said that the Chinese government was coolly assessing the latest U.S. actions.
“In negotiations, and especially in high-stakes negotiations, the side that reacts emotionally generally is the side that does not do well,” he said. “The U.S. side is approaching this from a more emotional side, while China is more calm and calculating.”
The International Emergency Economic Powers Act says that if the president decides that circumstances abroad have created “any unusual and extraordinary threat” to “the national security, foreign policy, or economy of the United States,” the president can declare a “national emergency.” This triggers special authority for the leader to regulate “any transactions in foreign exchange” by Americans.
The law was passed to define and restrain presidential power, which until then had been seen by critics as interpreted too expansively. It has served ever since as the main source of authority for presidents to sanction other countries or individuals in response to specific national security threats, such as the Iranian hostage crisis that began in 1979.
Seeking to use it in a trade dispute with a country like China would be a drastic departure from its history. But Trump could make the argument that through the theft of intellectual property or its military buildup in the South China Sea, China constitutes a national security threat akin to cyberattacks or other nonviolent attacks on the U.S.
The administration effectively previewed this view of Beijing in its national security strategy released in 2017, which described China as a “revisionist power” that has “expanded its power at the expense of the sovereignty of others.”
With Congress in recess, there was scant public response Saturday to the president’s latest assertion of authority.
But congressional Republicans, who consider a devotion to free-market principles to be a defining tenet and jealously guard their jurisdiction over trade matters, have balked in the recent past at Trump’s threats to use executive power to intervene in the economy.
In June, during a luncheon in the Capitol with senior White House and administration officials, GOP senators objected strongly to Trump’s threat to impose new tariffs on imports from Mexico.
Speaking with reporters before leaving Washington for France, Trump made clear how much of a priority his trade war with China has become for his presidency. “This is more important than anything else that we’re working on, just about,” he said.
But he brushed off the stock market drop in reaction to his statements Friday, saying he was “not at all” responsible and, besides, the markets had gone up substantially since he took office. “So don’t talk to me about 600 points,” he said, minimizing the drop in the Dow Jones industrial average.