White House economic adviser Larry Kudlow asserted President Trump’s threat to block trade between private Americans businesses and China, saying he has “emergency economic power authority” to do so.
“Do you believe that the president does have the authority to block private businesses from investing in China?” CBS News' Margaret Brennan asked Kudlow on “Face the Nation” Sunday.
“Ultimately, he does have authority,” responded Kudlow. “It’s an emergency economic power authority,” he said, adding that Trump “is not intending to” block trade with China at this time.
Amid an escalating trade war, Trump in a series of angry tweets Friday “ordered” American companies “to immediately start looking for an alternative to China, including bringing our companies HOME and making your products in the USA.”
Trump’s directive came before he announced a plan to put an additional tax on $300 billion worth of Chinese goods beginning Sept. 1. Trump was responding to China’s plan to increase tariffs on $75 billion worth of American goods.
“We don’t need China and, frankly, would be far better off without them,” he said.
In June, Apple said it had asked its suppliers to look into moving 15 to 30 percent of their production out of China. But that wouldn’t necessarily create jobs in the U.S.; instead, production would more likely shift to other countries in Asia.
Following up on his demand for businesses to cut ties with China, Trump cited the International Emergency Economic Powers Act of 1977, which gives the president broad powers “to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat.”
For all of the Fake News Reporters that don’t have a clue as to what the law is relative to Presidential powers, China, etc., try looking at the Emergency Economic Powers Act of 1977. Case closed!
The law, which was first used by President Jimmy Carter during the 1979 Iran hostage crisis to sanction Iran and freeze its assets, has been used in 54 national emergencies, 29 of which are ongoing, according to CNN. Earlier this year, Trump threatened to use the law to place tariffs on Mexican imports in an effort to stem illegal border crossings.
“In theory, that law exists,” Kudlow said, referring to Mexico. “He’s asking American companies to take a look, take a fresh look at, frankly, moving out of China, going someplace else. Preferably coming home to America.”
“That takes years,” Brennan interjected.
“It will take years, that is correct,” Kudlow said. “And that’s why there’s no immediate action here.”
‘I’ve heard him say this time and time again the couple of years I’ve been working here. He said it to individual business, he said it to the big business groups. He’s asking them to come home, come back to America. We’re giving you low taxes and low regulations and an entrepreneurial environment.”
“In a sense, this is nothing new,” Kudlow added. “Maybe the way it was phrased was a little tougher than usual.”
Companies that lost the most to Trump's trade war
Companies that lost the most to Trump's trade war
Estimated Loss: $1 billion
Last year was a rough one for Ford, with its stock plunging a stunning 39 percent over the course of 2018 as the company had to cut its full-year outlook in July due to waning sales in China. The automaker is also in the process of developing a restructuring plan that Morgan Stanley analysts estimate will result in 25,000 layoffs.
And on top of all that, tariffs on steel and aluminum have hit the company hard because, well, there’s a lot of both those things in cars. CEO Jim Hackett said that the tariffs cost the car company $1 billion in lost profits for 2018, reported Bloomberg.
Estimated Loss: Over $1 billion
Speaking of major American automakers with plans to lay off a lot of people, General Motors announced its own restructuring plans — including 15,000 layoffs and multiple plant closures — in 2018. And, like Ford, at least part of the problem is the hefty price tag it’s paying in tariffs on steel and aluminum. The company reported that tariffs had cost them $300 million more in second-quarter 2018 than 2017, putting the 2018 cost at over $1 billion.
Estimated Cost: $100-$200 million
Caterpillar is often used as a bellwether for the economy as a whole. It sells large construction equipment, meaning that when its business is good, people are building more things, and the rest of the economy is probably doing pretty well itself. As such, the fact that the company expects tariffs to cost them as much as $200 million off their bottom line for the year could ring alarm bells for some. And given that the company is planning on passing those costs along in the form of higher prices, it could hamper economic growth.
Estimated Cost: $250 million
You might be forgiven for having not heard of Cummins, but they’re an important engine in the economy, at least in the sense that they make engines for a wide variety of machines. However, the company is estimating that the tariffs will cost them some $250 million in 2019. And just $100 million of that can be attributed to the tariffs on steel and aluminum. The other $150 million is from direct tariffs on its own engine, many of which are manufactured in China and then imported.
Estimated Cost: $300 million
Whirlpool is among the companies that really took a hit in 2018, with its stock plunging by over a third of its value by year’s end. And the tariffs could have played a big role in that. The company is estimating that tariffs will cost them $300 million in 2019 — costs they intend to pass on to consumers by way of higher prices. And those higher prices, in turn, appear to be hurting sales, with Credit Suisse analysts downgrading the appliance maker in November citing reduced shipments.
Stanley Black & Decker
Estimated Cost: As much as $370 million
Toolmaker Stanley Black & Decker had to cut its projected profits for 2018 late in the year citing the increased costs associated with higher commodity costs, currency fluctuations and, you guessed it, tariffs. While the company plans to cut costs by $250 million in 2019, that’s still more than $100 million lost due to the trade war.
Estimated Cost: $120 million
Industrials company 3M makes a wide variety of goods necessary for making a wide variety of things, and as such, there are a lot of ways the tangled web of international supply chains can result in higher costs due to tariffs. Company executives say that the costs in 2018 went up to $20 million, but they’re expecting them to total around $100 million for 2019.
Estimated Cost: $300-$400 million
Speaking of companies with a bad 2018 in the books, General Electric found itself booted from the Dow Jones Industrial Average after over a century as a Dow member. And while its problems predated the tariffs, they’re certainly not helping anything. CEO John Flannery said in July that the costs to the company for the tariffs could reach as high as $400 million.
Estimated Cost: $4.25 billion
Toyota has put the cost of the tariffs at just $1,800. Not for them, for you. That’s how much more it’s anticipating a Camry will cost if there’s a 25 percent tariff slapped on the parts they need to import to assemble them in Kentucky. As for the cost to Toyota? Well, based on the 709,000 cars it imported to the United States in 2017, the Japanese automaker could be facing an annual — as in every year— hit of $4.25 billion.
Estimated Cost: Over $360 million
Major meat company Tyson Foods is taking a major hit on its profits. The market for chicken and pork in China is a big driver of business, so the retaliatory tariffs slapped on American products by the People’s Republic have taken a toll. The company announced that it was dropping profit projections by 12 percent in July 2018, which translates to over $360 million in lost profits. That figure is based on the $3.02 billion in profits Tyson reported for its fiscal year that ended on Sept. 28, 2018.
Estimated Cost: $1.9 billion
So, America’s soybean farmers are not a single company, but they might be the biggest losers in this tariff fight nonetheless. America was the largest exporter of soybeans to China, but the tariffs China imposed on the U.S. has resulted in a major market loss and sent prices down in 2018. Although the initial plunge was followed by a recovery, it still resulted in a slightly-less-than 5 percent decrease in soybean prices over the course of the year. And, based on the $41 billion in soybeans sold by American farmers in 2017, that drop translates to around $1.9 billion in lost value for their crop.
Giant Manufacturing Co.
Estimated Cost: $250 million
Among those people who are the most up-in-arms about the trade war are bicycle enthusiasts. One in 10 comments the U.S. Trade Representative (USTR) received during the public comment period on the new tariffs was related to bikes. And Giant Manufacturing, a — well — giant manufacturer of bicycles, expects to take a major hit on the cost of tariffs. Given that nearly all of the 15.4 million bikes imported to the U.S. come from China, Giant told the USTR that a 25 percent tariff would cost them $250 million a year.
Estimated Cost: $100 million
If you were thinking one way to counterbalance the cost of tariffs would be by eating leftovers more often, well, there’s some bad news. Newell Brands, the company that owns brands like Rubbermaid and Crockpot, announced that it was anticipating additional costs of $100 million. And that was only based on the current 10 percent rate. If the tariffs jump to 25 percent — assuming no deal with China can be reached — that would clearly be much higher.
Estimated Cost: $100 million
There are few more potent American symbols than a Harley Davidson motorcycle, which made the company an easy choice when the European Union was looking to find targets for retaliatory tariffs. Well, that and the fact that the company is based out of the home state of former Speaker of the House Paul Ryan. The company has said that the tariffs slapped on their bikes will cost the company about $100 million a year and result in a price increase of $2,200 for their average motorcycle.
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Trump on Sunday said he has second thoughts about the escalating tensions between the U.S. and China, but the White House later argued that the president had been “greatly misinterpreted” and that, to the contrary, “he regrets not raising the tariffs higher.”