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roval, so Trump would have authority • The International Economic and an expanded tax base. There are a few
to pursue such policies. However, Emergencies Powers Act (IEEPA) gives minor restrictions on inbound investment
imposing tariffs on a wide range of Chinese the president the authority to regulate that are based on equal treatment for
imports would likely increase the cost financial and commercial transactions “to US companies in a trading partner’s
of many every day goods for American deal with an unusual and extraordinary economy. Those commitments are codified
consumers as well disrupt supply chains threat, which has its source in whole in US obligations at the WTO under the
for American companies. It could also or in part outside the United States, to General Agreement on Trade in Services
lead China to challenge the United States the national security, foreign policy or (GATS), as well as in existing US free
at the WTO and impose tariffs on US economy of the United States.” While trade agreements and bilateral investment
exports in retaliation. As a result, Trump regulations such as US export controls are treaties. As a consequence, the United
may choose more targeted tariff actions authorized under IEEPA, the law also gives States has little latitude to expand that
in sectors such as steel - but even then the the president the authority to “investigate, list to prevent foreign investment from
risk of retaliatory actions that could impact regulate, prevent or prohibit” any type individual countries, particularly from
companies in other sectors will be real. of foreign transaction, including imports fellow WTO members.
and exports. There are no time limits on
If President Trump were to pursue these restrictions imposed under IEEPA. The United States does have the ability
policies, there are three US statutes that to restrict foreign acquisition of US
are relevant: The Trump campaign’s stated purpose for companies on the basis of national
• Section 301 of the Trade Act of considering punitive tariffs is to increase security, however, and could potentially
1974 gives the US Trade Representative manufacturing and jobs in the United try to expand that definition to curtail
(USTR) the authority to self-initiate a trade States. Even significantly higher tariffs on investment from China, whether under the
remedies case if an “act, policy, or practice imports from China are unlikely to create guise of food security or other perceived
of a foreign country…is unjustifiable such a result, however, as was seen in the threats. The collateral damage to US
and burdens or restricts United States outcomes of the United States’s use of economic interests from such potential
commerce.” It is a self-judging assessment tariffs on Chinese low-end tire imports in actions would need to be carefully
with no set investigation length before 2009. While the tire imports from China weighed. Greater parity in the US-China
acting. Thus, President Trump, acting decreased during the time the tariffs were investment relationship is needed, with
through USTR, could start a case after imposed, imports from other overseas BIT negotiations directed exactly at this
taking office and soon after begin assessing suppliers actually increased to offset the issue. While Trump has not commented
tariffs. decrease in imports from China and few on a US-China BIT, his skepticism of trade
jobs “returned to the United States4”. deals and China suggests negotiations are
• Section 122 of the Trade Act unlikely to continue after his inauguration,
of 1974 allows the president to impose Reciprocity and Chinese unless he sees it as part of the solution to
temporary duties to counter “large and Investment in the United States the “imbalanced” relationship.
serious United States balance-of-payments
deficits” -- that is, when the balance of Although not mentioned during the Nonmarket Economy Status
all US transactions, including trade, campaign, the leaked policy memo
investment, and financial transfers with indicates consideration of a shift to Trump has also not yet stated a position on
another country are in deficit. Tariffs allowing foreign investment in the United how the United States will handle the use
imposed under Section 122 cannot exceed States based on reciprocity, which would of nonmarket economy (NME) calculations
15 percent and may only be in place for be a significant change in US policy and in antidumping cases with China.
150 days. The United States has had a would potentially violate US international
balance of payments deficit with China obligations. In general, the United States When China joined the World Trade
for many years since the US imports more maintains few restrictions on inbound Organization (WTO) in 2001, its
than it exports from China and Chinese investment because those inflows are government’s pervasive intervention
direct investment in the US remains low deemed to bring economic growth, jobs, in the economy meant that China’s
-- key components of the calculation of the trading partners could not trust data
“balance” between the two economies. 4 returned to the United States: https://www.uschina. on production costs to determine a fair
org/sites/default/files/Issues%20Brief%20on%20 market value in antidumping cases. A
421%20Tariffs%20on%20Chinese%20Tires%2011%20 provision in China’s WTO accession
2010.pdf
to pursue such policies. However, Emergencies Powers Act (IEEPA) gives minor restrictions on inbound investment
imposing tariffs on a wide range of Chinese the president the authority to regulate that are based on equal treatment for
imports would likely increase the cost financial and commercial transactions “to US companies in a trading partner’s
of many every day goods for American deal with an unusual and extraordinary economy. Those commitments are codified
consumers as well disrupt supply chains threat, which has its source in whole in US obligations at the WTO under the
for American companies. It could also or in part outside the United States, to General Agreement on Trade in Services
lead China to challenge the United States the national security, foreign policy or (GATS), as well as in existing US free
at the WTO and impose tariffs on US economy of the United States.” While trade agreements and bilateral investment
exports in retaliation. As a result, Trump regulations such as US export controls are treaties. As a consequence, the United
may choose more targeted tariff actions authorized under IEEPA, the law also gives States has little latitude to expand that
in sectors such as steel - but even then the the president the authority to “investigate, list to prevent foreign investment from
risk of retaliatory actions that could impact regulate, prevent or prohibit” any type individual countries, particularly from
companies in other sectors will be real. of foreign transaction, including imports fellow WTO members.
and exports. There are no time limits on
If President Trump were to pursue these restrictions imposed under IEEPA. The United States does have the ability
policies, there are three US statutes that to restrict foreign acquisition of US
are relevant: The Trump campaign’s stated purpose for companies on the basis of national
• Section 301 of the Trade Act of considering punitive tariffs is to increase security, however, and could potentially
1974 gives the US Trade Representative manufacturing and jobs in the United try to expand that definition to curtail
(USTR) the authority to self-initiate a trade States. Even significantly higher tariffs on investment from China, whether under the
remedies case if an “act, policy, or practice imports from China are unlikely to create guise of food security or other perceived
of a foreign country…is unjustifiable such a result, however, as was seen in the threats. The collateral damage to US
and burdens or restricts United States outcomes of the United States’s use of economic interests from such potential
commerce.” It is a self-judging assessment tariffs on Chinese low-end tire imports in actions would need to be carefully
with no set investigation length before 2009. While the tire imports from China weighed. Greater parity in the US-China
acting. Thus, President Trump, acting decreased during the time the tariffs were investment relationship is needed, with
through USTR, could start a case after imposed, imports from other overseas BIT negotiations directed exactly at this
taking office and soon after begin assessing suppliers actually increased to offset the issue. While Trump has not commented
tariffs. decrease in imports from China and few on a US-China BIT, his skepticism of trade
jobs “returned to the United States4”. deals and China suggests negotiations are
• Section 122 of the Trade Act unlikely to continue after his inauguration,
of 1974 allows the president to impose Reciprocity and Chinese unless he sees it as part of the solution to
temporary duties to counter “large and Investment in the United States the “imbalanced” relationship.
serious United States balance-of-payments
deficits” -- that is, when the balance of Although not mentioned during the Nonmarket Economy Status
all US transactions, including trade, campaign, the leaked policy memo
investment, and financial transfers with indicates consideration of a shift to Trump has also not yet stated a position on
another country are in deficit. Tariffs allowing foreign investment in the United how the United States will handle the use
imposed under Section 122 cannot exceed States based on reciprocity, which would of nonmarket economy (NME) calculations
15 percent and may only be in place for be a significant change in US policy and in antidumping cases with China.
150 days. The United States has had a would potentially violate US international
balance of payments deficit with China obligations. In general, the United States When China joined the World Trade
for many years since the US imports more maintains few restrictions on inbound Organization (WTO) in 2001, its
than it exports from China and Chinese investment because those inflows are government’s pervasive intervention
direct investment in the US remains low deemed to bring economic growth, jobs, in the economy meant that China’s
-- key components of the calculation of the trading partners could not trust data
“balance” between the two economies. 4 returned to the United States: https://www.uschina. on production costs to determine a fair
org/sites/default/files/Issues%20Brief%20on%20 market value in antidumping cases. A
421%20Tariffs%20on%20Chinese%20Tires%2011%20 provision in China’s WTO accession
2010.pdf
