Pedro da Costa: Hi, I'm Pedro Costa, Editorial Fellow here at the Peterson Institute for International Economics. I'm joined by Gary Hufbauer, Senior Fellow here at the Institute, to talk about the limits and perhaps lack thereof on presidential powers on trade. Of course, we have a presidential election cycle that's been very hot on anti-trade rhetoric. But some folks wonder how much could a president really accomplish on their own if they were to, for instance, renege on trade agreements.
Gary Clyde Hufbauer: Well, exactly, and some folks may have actually read the US Constitution, not very many people, but some have. And Article I Section 8 gives the Congress power over foreign commerce and also interstate commerce. And that's often quoted including by the Congress.
But what has happened in the last 100 years is that the Congress to a series of statutes has delegated a tremendous amount of power to the president. It delegated it in times which were nobody imagined an election like this or the kind of threats Donald Trump has made. But the statutes are very clear that's given the president a tremendous amount of power to restrict commerce. Some statutes also gave the president power to liberalize commerce in the context of trade agreements, but it's the restrictions that I'm talking about now.
Pedro da Costa: Sure. Now, of course, Donald Trump, the Republican candidate, has made some pretty strong campaign promises on trade including potentially raising tariffs to 45 percent on China to 35 percent on Mexico, pulling out of trade agreements. Now, some people think that by the very nature of American checks and balances that not only the legislature but also the judiciary could surely put some limits on what he might be able to accomplish. But your research suggests otherwise.
Gary Clyde Hufbauer: Well, my research suggests it would be a long haul to get those limits because it would be a matter of clawing back the powers that Congress has delegated to the president. 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. He can withdraw from all of that. And that's a presidential power over foreign affairs. All of these agreements have clauses which are termination clauses typically six months' notification then terminate. But that's just the start. That's just the start. He has other powers in his hip pocket going back to 1917, the so-called Trading with the Enemy Act.
Pedro da Costa: Explain that a little bit.
Gary Clyde Hufbauer: You know it's 100 years ago, people may think these statutes expire. They don't expire. They're everlasting unless actually reformed by Congress. And the Trading with the Enemy Act which was during the First World War gave the power to the president to stop all forms of commerce, I mean all forms. This could be finance. It could be patent licensing, and of course, it could be trade, imports and exports; all forms of commerce with all nations not just the enemy, all nations, during war time.
And not only can he stop all commerce, he can seize foreign asset. Anything you get your hands on in the US which would be patents, it would be factories, it would be cash and banks; that he can seize. Seize means take away. Now, this has been used during war time and so on. But it has also been used until very commonly until the 1970s to impose economic sanctions on many countries around the world for various purposes. Now you say, well, you know, where was the war?
Congress declares war sometimes. The last time it declared war was during the Second World War. And Congress also gives war resolutions as for Iraq and Afghanistan and there are many others in history. The result is that the US is almost always at war for purposes of this statute. So the president can invoke it.
Pedro da Costa: So what if a voter looks at the wars in Afghanistan and Iraq winding down now and they think that we're not going to get into any other wars, then perhaps this wouldn't apply. Why is that incorrect?
Gary Clyde Hufbauer: The innocent citizen might very well think that. There are a couple of other reasons. There's other statutes. That's just the first. That's the grandfather. But we have the so-called International Emergency Economic Powers Act which is kind of a modernization of the Trading with the Enemy Act under President Carter in 1977. And it gives all the same powers to the president, almost all. He can't seize assets. He can freeze assets. But otherwise on commerce until he can stop it. And that means putting up tariffs or whatever.
If he declares—if he, the president, declares a national emergency, you might think, well, there's some limitation there. He's got to declare a national emergency. The fact of the matter is that courts had never questioned a presidential declaration of national emergency. 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.
But that's not the end of it either. Those are the two big grandfather, big daddy statutes. There are, at least, three other more modest statutes where there are limits that are in the presidential pocket. And they are all called war statutes. So he's got at least five statutes he can draw on or his lawyers can draw on to do all this stuff that he's talking about if he was elected and have a mind to do it.
Pedro da Costa: Wow. So, the lesson is, don't take the executive powers of the US President lightly. And also in a sense, people have looked at Donald Trump's campaign promises as negotiating positions. But by your account, really, we should take them at face value. Is that correct?
Gary Clyde Hufbauer: Well, he could use them. Now, there will be retaliation if he uses them. There would be all sorts of dislocation in the US 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 don't just sit down and take it.
And at some point, Congress might think, "Gee, we gave too much of our constitutional powers away to the president. And we need to take some of these back." But you know how slow congressional legislation is.
Pedro da Costa: The horse has left the barn by then.
Gary Clyde Hufbauer: Yeah.
Pedro da Costa: Okay. Thank you so much, Gary. I appreciate your time.
Gary Clyde Hufbauer: Thank you.