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Ahead of G7, Trump Asserts He Can Force U.S. Companies to Leave China Trump Asserts He Can Force U.S. Companies to Leave China
(about 3 hours later)
BIARRITZ, France — President Trump asserted on Saturday that he has the authority to make good on his threat to force all American 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.BIARRITZ, France — President Trump asserted on Saturday that he has the authority to make good on his threat to force all American 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, Mr. Trump posted a message on Twitter citing the International Emergency Economic Powers Act of 1977 — a law meant to enable a president to isolate criminal regimes but not intended to be used to cut off economic ties with a major trading partner because of a disagreement over tariffs. As he arrived in France for the annual meeting of the Group of 7 powers, Mr. 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,” Mr. Trump wrote. “Case closed!”“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,” Mr. Trump wrote. “Case closed!”
The president’s tweet could further unsettle American companies that still conduct an enormous amount of business with China amid a trade war that has already strained ties. Stock markets fell sharply on Friday after Mr. Trump first raised the prospect of cutting off trade altogether. 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 United States that rely on China in their production and sale of everything from clothing to smart telephones.
The threat came after the Chinese government said it would raise tariffs on American goods in retaliation for the latest levies imposed by Mr. Trump on $300 billion in Chinese imports. Mr. Trump vowed hours later to raise tariffs further. Mr. 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 M. Nixon’s diplomatic opening to Beijing in the early 1970s.
Under the weight of Mr. Trump’s tariff war, China has already fallen from America’s largest trading partner last year to the third largest this year. Mr. Trump’s claim that he has the power to order American 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, Mr. Trump has gone even further in creative ways to take action on his priorities.
China’s commerce ministry issued a strongly worded statement on Saturday evening warning the United States to turn back from ever-escalating confrontation, but it did not threaten any new trade measures. “Any invocation of the International Emergency Economic Powers Act in these circumstances and for these purposes would be an abuse,” said Daniel M. 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 Mr. Trump’s tariff war, China has already fallen from America’s largest trading partner last year to the third largest this year. The United States remains China’s largest trading partner. China said Friday that it would raise tariffs on American goods in retaliation for Mr. Trump’s latest levies and the president vowed hours later to increase tariffs even further.
China’s commerce ministry issued a strongly worded statement on 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 statement said.“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 statement said.
China warned that the United States would suffer as a result. American business leaders in China said on Saturday that forcing United States companies to leave the country would hurt the competitiveness of American industry and could cause heavy financial losses.
“The Chinese side strongly urges the U.S. side not to misjudge the situation, not to underestimate the determination of the Chinese people, and immediately stop the wrong approach, otherwise all consequences will be borne by the U.S.,” the statement added. “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, the president of the American Chamber of Commerce in Shanghai.
“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,” Mr. Gibbs said.
Business leaders said that if American companies were forced by Washington to leave China, the result could be a series of fire sales at greatly reduced prices. Companies from other countries, especially in Europe, would snap up the businesses on sale and it could be hard for the United States to re-enter the market later.
In raising the possibility of forcing American businesses to pull out of China on Friday, Mr. Trump framed it not as a request but as an order he had already issued.In raising the possibility of forcing American businesses to pull out of China on Friday, Mr. 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.”“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. Instead, it could be the latest negotiating tactic by a president who favors drastic threats without always following through on them in hopes of forcing partners to make concessions. 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 American 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 Mr. Xi and described him as a friend, taking the Chinese leader at his word that he would stem the flow of fentanyl to the United States. In the last two days, he has accused Mr. 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 American actions.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 American 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.”“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.”
Mr. Trump’s threat to invoke the 1977 act to force companies to leave China would be his most recent unorthodox use of authorities that Congress delegated to the presidency for exigent circumstances.
The president previously threatened to use emergency powers to impose tariffs on Mexican goods, unless the Mexican government did more to stop migrants from illegally entering the United States. He backed off after Mexico promised to take tougher action.
His effort to use emergency powers could also be challenged in court, given the restrictions surrounding when it can be invoked.
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 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.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.
As of March 1, presidents had declared 54 national emergencies under the law, of which 29 were still active, according to the Congressional Research Service. Among others, presidents have used it to target international terrorists, drug kingpins, human rights abusers, cyber attackers, illegal arms proliferators, and multinational criminal organizations.As of March 1, presidents had declared 54 national emergencies under the law, of which 29 were still active, according to the Congressional Research Service. Among others, presidents have used it to target international terrorists, drug kingpins, human rights abusers, cyber attackers, illegal arms proliferators, and multinational criminal organizations.
Presidents relied on the law’s authority when Iraq invaded Kuwait in 1990, when Serbia sent troops into Kosovo in 1998 and when Russia annexed Crimea in 2014. Among the countries targeted at various points over the years have been international outliers like North Korea, Sudan, Somalia, Yemen, Syria, Congo and Venezuela.Presidents relied on the law’s authority when Iraq invaded Kuwait in 1990, when Serbia sent troops into Kosovo in 1998 and when Russia annexed Crimea in 2014. Among the countries targeted at various points over the years have been international outliers like North Korea, Sudan, Somalia, Yemen, Syria, Congo and Venezuela.
Seeking to use it in a trade dispute with a country like China would be a drastic departure from its history. But Mr. Trump could make the argument that China’s theft of intellectual property constitutes a national security threat akin to cyber attacks or other nonviolent attacks on American sovereignty. Seeking to use it in a trade dispute with a country like China would be a drastic departure from its history. But Mr. 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 cyber attacks or other nonviolent attacks on the United States.
Mr. Trump came to office criticizing President Barack Obama for abusing his executive authority but has himself asserted new and creative ways of taking action that his predecessors never used. The Trump administration effectively previewed this view of Beijing in its official 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.”
Among other things, he invoked a related national emergency law to finance parts of his proposed wall along the Mexican border even though Congress explicitly refused to authorize the money. So far, Mr. Trump has successfully rebuffed legal challenges to that decision. With Congress in recess, there was scant public response on 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 Mr. Trump’s threats to use executive power to intervene in the economy.
In June, during a private luncheon in the Capitol with senior White House and administration officials, Republican senators objected strongly to Mr. Trump’s threat to impose new tariffs on imports from Mexico.
At the same time, given their years of experience dealing with the president’s whipsawing declarations, particularly when it comes to trade, many lawmakers have concluded that there is no upside to publicly criticizing Mr. Trump, preferring instead to try to influence him through private conversations.
Senator Charles Grassley, Republican of Iowa and the chairman of the Finance Committee, warned in a statement on Friday evening that Mr. Trump could harm Americans if he slapped additional tariffs on China.
Speaking with reporters before leaving Washington for France, Mr. Trump made clear how much of a priority his trade war with China has become for his presidency.Speaking with reporters before leaving Washington for France, Mr. 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.“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 on Friday, saying he was “not at all” responsible and, besides, the markets had gone up substantially since he took office.But he brushed off the stock market drop in reaction to his statements on 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.“So don’t talk to me about 600 points,” he said, minimizing the drop in the Dow Jones industrial average.
Mr. Trump’s meetings in Biarritz could be tense given the economic uncertainty and his many policy differences with his global counterparts. The American president has become such a dissenter from the international consensus that President Emmanuel Macron of France, the host, has decided even not to bother trying to craft a single joint statement for the first time in the history of the summit.
“This is another G7 summit which will be a difficult test of unity and solidarity of the free world and its leaders,” Donald Tusk, the president of the European Union, told reporters in Brussels.
“There is still no certainty whether the group will be able to find common solutions, and the global challenges are today really serious, or whether to focus on senseless disputes among each other.”
He warned against further economic conflict.
“Trade deals and the reform of the W.T.O. are better than trade wars,” he said, referring to the World Trade Organization. “Trade wars will lead to recession while trade deals will boost the economy.”
After landing in Biarritz, Mr. Trump had lunch with Mr. Macron and the two put on a friendly show for reporters.
“We will be allies, friends,” Mr. Macron said.
Mr. Trump insisted that he and Mr. Macron “actually have a lot in common” and “have been friends a long time.”
“Once in a while we go at it just a little bit,” he added, “not very much.”