In the wake of a fresh round of retaliatory tariffs that China slapped on US goods, President Trump told US companies to “start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.
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Although some US companies had already started to move some of their operations out of China even before the trade war started, totally shutting down facilities would still take time. And with a huge and still-growing Chinese market, some US companies will be reluctant to totally forego that opportunity.
Watch the video to learn more about Trunp’s pressure to bring companies back home.
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Video credit: Rumble
With no centrally planned economy like China’s, what can the president do to pressure these companies to follow suit?
Trump actually has several legal tools that he can use without having to go through Congress. They are:
1 – Even more tariffs
In essence, make operations in China so unprofitable that US companies are forced to pack up and leave.
2 – Declare a “national emergency”
This means following the same playbook as the US is doing to Iran. Under a 1977 law called the International Emergency Economic Powers Act, or IEEPA, Trump can declare a national emergency.
With a national emergency declaration in place, Trump has free reign to target individual companies or even whole economic sectors, said former federal officials and legal experts.
Tim Meyer, director of the International Legal Studies Program at Vanderbilt Law School in Nashville, cited an example. For instance, if Chinese intellectual property infringement is declared as an emergency, Trump can order US companies not to engage in certain transactions like buying Chinese technology products.
A similar strategy was used when Trump threatened to slap tariffs on Mexican imports when he said illegal immigration was an emergency.
“The IEEPA framework is broad enough to do something blunt,” said Meyer.
3 – Curbs on federal procurement contracts
Bill Rensch, a senior adviser at the Center for Strategic and International Studies think tank, says that another carrot-and-stick approach that does not require congressional approval would be to block US companies who have operations in China from participating in federal contracts.
Such a move would likely target only specific sectors since a blanket order would affect companies like Boeing, which is both a top defense contractor and a maker of commercial jetliners.
Boeing even launched its first completion plant for 737 planes in China in December. Both Boeing and Airbus are competing heavily for China’s fast-growing aviation market which many believe will become the world’s largest in the next decade.
4 – The 1917 Trading with the Enemy Act
This move will be far more extreme and therefore extremely unlikely. This measure allows the US president to punish and regulate trade with any country the US is at war with. However, such a move would sharply escalate tensions with China, says Mark Wu, a professor of international trade at Harvard Law School.
“It would be a much more dramatic step to declare China to be an enemy power with which the U.S. is at war, given the president has at times touted his friendship with and respect for President Xi (Jinping),” said Wu.
“That would amount to an overt declaration, while IEEPA would allow the Trump administration to take similar actions without as large of a diplomatic cost.”
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