It’s U.S. President Donald Trump’s tweets again! Last Aug 23, President Trump in his tweets ordered US companies to move out of China and find alternative countries to do business. He also urged them to start manufacturing their products in the U.S. instead.
IEEPA of 1977
In a separate tweet, Trump referred to the International Emergency Economic Powers Act (IEEPA) passed in 1977, to justify his decisions. The act gives authority to the US president to deal with “unusual and extraordinary threats… to national security, foreign policy, or economy of the United States”.
Political and Economic Cost
President Trump may have everything he needs to pull every single US company out of China. But this move, indeed, would cost him politically, which is a dear price to pay.
Also, wielding the powers vested by the IEEPA will undoubtedly earn Trump an enormous pushback, even from his own circle.
Using the whip of the IEEPA is such an extreme step that it will be too politically and economically costly for Trump. Thus, analysts believe that it is unlikely that the US President would really push through with the plan.
Leaving Even Without the Order
US companies in China are actually leaving now because of the weight of the two economic giants’ tariff war. It might be seen as an indirect move to actually pull US companies out of China.
In its latest move, the United States started imposing 15% tariffs on Chinese goods, and China retaliated with fresh duties.
China also filed a tariff complaint against the U.S. at the World Trade Organization. This move is a response to the United States’ tariffs on their exports.
With the tariffs the US is imposing, it affects a large chunk of China’s export goods which cost $300 billion. This is the third complaint China filed against the U.S. so far.
The last thing Chinese president Xi Jinping would want is to look weak in public. But it must be a balancing act of looking and staying firm while searching for ways to reach an agreement.