When President Donald Trump announced #tariffs on Mexican imports during his dispute over border control earlier this year, he cited his authority under the International Emergency Economic Powers Act. (IEEPA). In August, as part of an ongoing trade war with China, the president again claimed his powers under the IEEPA in a directive to U.S. companies to shift manufacturing from China to the U.S. His actions have raised questions about exactly what the IEEPA is and what authority it gives to a president.
Enacted in 1977, the International Emergency Economic Powers Act is a federal law that authorizes the president to declare a national emergency with respect to any “unusual and extraordinary threat to the national security, foreign policy or economy of the United States” that originates from outside the country. Once the president declares and identifies the specific threat, he is then at liberty to impose a range of economic penalties on any countries and people associated with that threat, including blocking transactions and freezing assets.
The #IEEPA was passed in order to clarify and rein in presidential power when it came to national emergencies. Under the Trading with the Enemy Act of 1917, presidents had the power to declare emergencies without limiting their scope or duration and without congressional oversight. Under the IEEPA, Congress can vote to end the state of emergency. However, the president can veto such a vote in the absence of a two-thirds majority in Congress and decide to take economic actions against the countries with which he takes issue.
The first declaration under IEEPA dates back to 1979, when Jimmy Carter invoked it in response to the Iranian hostage crisis. Since then presidents have used the authority to safeguard our country’s national security interests, primarily by imposing sanctions against foreign countries, governments and individuals as well as political organizations and suspected terrorists and terrorist groups.
When President Trump said he would use his authority to introduce tariffs on Mexican exports in response to the national security threat of illegal immigration into the U.S., it represented an unprecedented use of the IEEPA. No president had previously invoked the law to impose tariffs on goods from another country.
With respect to Chinese trade, the IEEPA allows the president to regulate commerce during a national emergency but it does not authorize him to order companies to close their operations and leave foreign countries. To date, the president has yet to declare a national emergency or specifically indicate an "unusual and extraordinary threat." He lacks the authority to pull existing investments out of China, but declaring an emergency would give him the power to prevent future funds from being transferred between the two countries.
Activating IEEPA would certainly cause more economic uncertainty at a time when recession fears are growing. If you have questions or concerns about how this might impact your business, call us at 973-509-8500 x213 or email LFarber@LFarberLaw.com.
The contents of this writing are intended for general information purposes only and should not be construed as legal advice or opinion in any specific facts or circumstances.
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