Explained: The law that Donald Trump says he can use against American firms in Chinahttps://indianexpress.com/article/explained/us-china-trade-war-g7-summit-donald-trump-5936145/

Explained: The law that Donald Trump says he can use against American firms in China

The law was intended to target terrorists, drug traffickers and regimes that the United States considers criminal, such as those in Iran, Syria, and North Korea, not to cut economic ties with a major trade partner on the question of tariffs.

What is Emergency Economic Powers Act of 1977
This sequence of events began with a post by President Trump on Twitter as he arrived for the G7 Summit in France, saying he could force all American businesses to leave China. (File photo)

Donald Trump has been flip-flopping on China—threatening to escalate the trade war, then saying he has “second thoughts about everything”, only for the White House to clarify that he had been “greatly misinterpreted” on the latter statement.

This sequence of events began with a post by President Trump on Twitter as he arrived for the G7 Summit in France, saying he could, under the International Emergency Economic Powers Act of 1977, force all American businesses to leave China.

“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 tweeted. “Case closed!”

So what is United States International Emergency Economic Powers Act, and what is it used for?

The law

This federal law, “an Act with respect to the powers of the President in time of war or national emergency”, was enacted by the US Congress on October 28, 1977, and became effective on December 28 that year.

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The law was intended to target terrorists, drug traffickers and regimes that the United States considers criminal, such as those in Iran, Syria, and North Korea, not to cut economic ties with a major trade partner on the question of tariffs, American media have pointed out.

President’s powers

The authority granted to the US President under the Act “may be exercised 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”.

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In an explainer on the subject, Vox underlined two important points: that the Act allows the President to regulate commerce during a national emergency, but not to order companies to close their factories in foreign countries; and that the President has not so far declared a national emergency with respect to US trade with China.

Earlier, Mexico

President Trump has mentioned the International Emergency Economic Powers Act in the context of US trade relations with foreign countries earlier, too. Earlier this summer, he had said that he could, under powers given by the Act, slap levies on imports from Mexico. He was at the time in the middle of a dispute with Mexico on the issue of border control.