A Trump Trade Philosophy?

Recent and Decades-Old Statements Link Trade to Military Security

As citizen, candidate, President-elect, and President, Donald Trump has consistently railed against the United States’ “unfair” trade treatment by allies, rivals and global organizations from the Europe to Japan to South Korea to China to the WTO.

It is not exactly clear what Mr. Trump means by “unfair.” The President’s imposition this year of tariffs on washing machines and solar panel imports, followed by steel and aluminum tariffs, suggest that “unfair” refers to practices, like dumping and government subsidies, that unfairly advantage foreign exporters.

Commoditized Military

Other of Mr. Trump’s statements, including dating back decades, hint that he views trade as “unfair” when other nations fail to compensate the United States for providing the secure conditions under which they trade and prosper.

In 1987, Citizen Trump took out full page ads in three major newspapers criticizing U.S. “foreign defense policy” for its lack of “backbone.” Why, asked Mr. Trump, were foreign nations like Japan “not paying the United States for the human lives and billions of dollars we are losing to protect their interests?”

In a 1988 interview with Oprah Winfrey, Mr. Trump wondered why Kuwait, “where the poorest people live like kings,” was not paying the United States “25 percent of what they’re making” from oil sales when “we make it possible for them to sell their oil.”  More recently, to extract trade concessions, the President reminded South Korea of its reliance on the United States for its security.

Transactional Security

The President’s prior and recent statements seem to suggest that, in Mr. Trump’s view, international trade—or the United States’ economic position relative to other nations—is not fair unless the United States is at a net advantage vis-à-vis allies and rivals or is adequately compensated for directly or indirectly providing the security that facilitates trade and other economic activity.

Legally, the President’s views as to how matters of international trade and economic relations, on the one hand, and military/security and national security, on the other hand, mix and meet is significant, as U.S. law vests the President with legal authority to pursue trade measures on national security grounds.

Presidential Power: IEEPA

For example, the International Emergency Economic Powers Act of 1977 (IEEPA) expressly empowers the President to “investigate, regulate or prohibit,” transactions in foreign currency and exchange and foreign investment in the United States “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.” Section 232 of the Trade Expansion Act of 1962 (known also as the “National Security Clause”) authorizes the President to, among other things, restrict imports on national security grounds.

Having statutory and other legal authority to, on national security grounds, regulate, prohibit and/or limit international trade and transactions, as well as foreign investment in the United States, the President’s definition of “national security” and its relationship to international trade and economic relations is legally significant and consequential.

Therefore, understanding the President’s philosophy, as well as his ultimate objectives, lends meaning to the Trump Administration’s trade moves and their legal consequences, including in connection with any “trade wars” or skirmishes with China, EU nations and others.

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