Could Trump Act Unilaterally on Trade?
Article I Section 8 of the United States Consitution gives the Congress power over foreign and interstate commerce. But over the last 100-plus years Congress has enacted a series of statutes that delegate much of the power over commerce to the president, both to restrict commerce and to liberalize commerce, within the context of trade agreements.
“The statutes are very clear that [Congress has] given the president a tremendous amount of power to restrict commerce,” said Gary Hufbauer, senior fellow at the Peterson Institute for International Economics, at a recent program in Washington. “Some statutes also gave the president power to liberalize commerce in the context of trade agreements.”
President-elect Donald Trump, during the reent campaign, threatened to raise tariffs to 45 percent on China and 35 percent on Mexico and to pull out of trade agreements. Hufbauer’s research suggests that Trump could pull off his threats without legislative approval.
“It would be a matter of clawing back the powers that Congress has delegated to the president,” he said. “So here’s the problem. The president has the initiative. He can withdraw from trade agreements—NAFTA, the trade agreement with Korea, even the World Trade Organization.”
All of those agreements have clauses which allow termination typically on six months’ notice.
The president can also influence trade under the 1917 Trading with the Enemy Act. That legislation, enacted during World War I, “gave the power to the president to stop all forms of commerce,” according to Hubauer. “This could be finance,” he added. “It could be patent licensing, and of course, it could be imports and exports, all forms of commerce with all nations and not just the enemy, during wartime.”
The same powers allow the president to seize foreign asset. These powers have “been used very commonly until the 1970s to impose economic sanctions on many countries around the world for various purposes,” said Hufbauer.
Another statute, the International Emergency Economic Powers Act, enacted in 1977, allows the president to freeze assets and increase tariffs, once the president declares a national emergency.
“The courts have never questioned a presidential declaration of national emergency,” said Hufbauer. “So we have had national emergencies for Nicaragua, Sierra Leone, Grenada, and countries which by common parlance never create any kind of threat to the United States.”
What will be the consequences if President Trump invokes any of these powers?
“There will be retaliation if he uses them,” said Hufbauer. “There would be all sorts of dislocation in the U.S. economy. “There would be people out of work because their factories can’t get the parts and components that they need to make whatever they’re making to sell to the American public. There would be Boeings not sold. There would be Caterpillar tractors not sold, turbines not sold, because foreign countries won’t just sit down and take it.”