Trump aides downplay 'order' for US companies to leave China

Treasury Secretary Steven Mnuchin (left) and economic adviser Larry Kudlow tried smooth out tensions in the business community prompted by President Donald Trump's tweet.
Treasury Secretary Steven Mnuchin (left) and economic adviser Larry Kudlow tried smooth out tensions in the business community prompted by President Donald Trump's tweet.PHOTOS: REUTERS, AFP

WASHINGTON • United States President Donald Trump's top aides have 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 was met with scepticism.

Treasury Secretary Steven Mnuchin and White House economic adviser Larry Kudlow took to the airwaves on Sunday from France - where Mr Trump is participating in the Group of Seven summit - to smooth out tensions in the business community prompted by Mr Trump's tweet last Friday.

Mr 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," Mr Mnuchin told Fox News Sunday.

Mr Mnuchin said the 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," Mr Mnuchin said.

 
 
 
 

The Trump administration wants US businesses to operate in places where "trading partners respect us and trade with us fairly", he 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."

Last Friday, Mr Trump - furious at Beijing's decision to hike tariffs on US goods - sounded the alarm to home-grown companies just before announcing a planned escalation in tariffs on Chinese imports.

"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.

Professor Jennifer Hillman from Georgetown University Law Centre and a former general counsel in the office of the US Trade Representative, said on Twitter that she does not believe Mr Trump can invoke the IEEPA because he has not met the "prerequisites".

She also said there were no "retroactive controls" on foreign direct investment already made.

On Sunday, Mr Kudlow emphasised on CNN's State Of The Union: "There's nothing right now in the cards.

"Come back to the USA, where we have very low corporate tax rates and massive deregulation programmes.

"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 labour.

Despite the uptick in tensions, Mr Kudlow insisted US-China trade talks would go ahead next month in Washington.

 
A version of this article appeared in the print edition of The Straits Times on August 27, 2019, with the headline 'Trump aides downplay 'order' for US companies to leave China'. Print Edition | Subscribe