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Trump aides downplay ‘order’ to US companies to leave China
WASHINGTON, Aug 26, 2019 (BSS/AFP) – Donald Trump’s top aides on Sunday
downplayed the idea of US companies being forced to abandon China any time
soon, as an edict from the president ordering businesses to start looking for
alternatives has been met with skepticism.
Treasury Secretary Steven Mnuchin and White House economics advisor Larry
Kudlow took to the airwaves from France, where Trump is participating in the
G7 summit, to smooth out tensions in the business community prompted by
Trump’s Friday tweet.
Trump said he has “no plan now” to bring US companies in line, and his
aides quickly reinforced the message.
“He would have the authority to do that… He has not done that,” Mnuchin
told “Fox News Sunday.”
Mnuchin said that authority comes from the somewhat obscure International
Emergency Economic Powers Act (IEEPA), a federal law passed in 1977.
The law grants the president powers to regulate international trade in the
face of an “unusual and extraordinary threat” from abroad to US foreign
policy, national security or the economy.
But it has never been used to tip the scales in a trade dispute.
“I think what he was saying is that he is ordering companies to start
looking,” he added.
The Trump administration wants US businesses to operate in places where
“trading partners respect us and trade with us fairly,” Mnuchin added.
Senior Trump aide Stephen Miller said in an interview with Fox News: “No
American business ought to be wholly dependent on China. It’s not a good
long-term investment.”
– ‘Come back to the USA’ –
On Friday, Trump — furious about Beijing’s decision to hike tariffs on US
goods — sounded the alarm to homegrown companies just before announcing a
planned escalation in tariffs on Chinese imports.
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“Our great American companies are hereby ordered to immediately start
looking for an alternative to China, including bringing your companies HOME
and making your products in the USA,” he said on Twitter — sending Wall
Street tumbling.
Jennifer Hillman, a professor at Georgetown University’s School of Law and
a former general counsel in the office of the US Trade Representative, said
on Twitter that she does not believe that Trump can invoke the IEEPA because
he hasn’t met the “prerequisites.”
She also said there were no “retroactive controls” on foreign direct
investment already made.
On Sunday, Kudlow emphasized: “There’s nothing right now in the cards.”
“Come back to the USA, where we have very low corporate tax rates and
massive deregulation programs,” Kudlow said on CNN’s “State of the Union.”
“Our economy is doing just fine right now, and so come home.”
Already, some companies, especially in the clothing and electronics
sectors, have started making adjustments to their supply chains and
researching production sites outside China, in other countries with low-cost
labor.
But business leaders have cautioned that such changes take time.
The National Retail Federation, though critical of China’s trade
practices, offered a furious reaction on Friday to the latest salvos from the
Trump administration.
“It’s impossible for businesses to plan for the future in this type of
environment,” said senior vice president of government relations David
French.
“The administration’s approach clearly isn’t working, and the answer isn’t
more taxes on American business and consumers. Where does this end?”
For Gerald Seib, the executive Washington editor of The Wall Street
Journal, Trump’s “order” was a sign of frustration from a president who
nevertheless cannot stop the power of capitalism.
“This is a capitalist system and whether presidents like it or not,
companies make decisions on what they do and they don’t do, what they buy and
what they sell and where they make goods based on what’s in their own best
interests,” Seib wrote.
“He can’t simply make it happen by snapping his fingers.”
Despite the uptick in tensions, Kudlow insisted that US-China trade talks
would go ahead next month in Washington.
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