Everyone Is on Edge at the G7 As Trump Disrupts Global Trade

Photo: Francois Mori (AP)

The “Great Disrupter” Donald Trump certainly is ensuring he gets the attention he so desperately craves as this weekend’s Group of 7 summit gets underway in southern France.

Trump on Friday launched into a tirade against China, announcing more tariffs on Chinese goods after China had announced similar, albeit less severe, measures on U.S. exports. Trump said he plans to raise tariffs from 25% to 30% on $250 billion of Chinese goods, and from 10% to 15% on an additional $300 billion of goods that have yet to be placed under tariff, according to The Washington Post.

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That move responded to an earlier announcement by China that it was imposing new tariffs on about $75 billion in U.S. goods, including auto products.

Trump’s rant on Friday, which extended over nearly a dozen tweets and criticized both Chinese President Xi Jinping and Trump’s own handpicked Federal Reserve Chairman Jerome Powell, also “ordered” U.S. companies to “immediately” begin pulling out of China’s market, which encompasses some 1.4 billion consumers. To state the obvious, that’s an insane order.

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The Post reacted to that by writing, “The White House does not have the authority to force companies to follow such directives, and Trump’s demand came under sharp and immediate criticism from the U.S. business community, which warned that halting sales with such a large trading partner would hurt American companies and the broader economy.”

Trump doubled down on the threat late Friday, citing a national security law called the International Emergency Economic Powers Act of 1977.

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“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!” he tweeted.

The act states that, “Any authority granted to the President by section 1702 of this title may be exercised 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.”

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According to The New York Times, presidents have declared 54 national emergencies under that law, including those targeting “international terrorists, drug kingpins, human rights abusers, cyber attackers, illegal arms proliferators, and multinational criminal organizations.”

Examples include Iraq’s invasion of Kuwait in 1990, Serbian troops sent to Kosovo in 1998, and Russia’s annexation of Crimea in 2014. Other targeted countries include North Korea, Sudan, Somalia, Yemen, Syria, Congo, and Venezuela, according to the Times.

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Of course, Trump loves to bluff, as the newspaper pointed out, including past threats to shut down the southern U.S. border and impose tariffs on goods imported from Mexico over the immigration issue. Neither of those threats came to fruition.

And following through with such an order against U.S. companies, again, would be insane.

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“Any invocation of the International Emergency Economic Powers Act in these circumstances and for these purposes would be an abuse,” Daniel Price, a former international economic adviser to President George W. Bush, told the Times. “The act is intended to address extraordinary national security threats and true national emergencies, not fits of presidential pique.”

Trump also has threatened European allies, including France, over a digital services tax that the U.S. administration feels unfairly targets tech companies like Google, Facebook, Amazon, and Apple, among others, Politico reported. Trump threatened to tax French wine in retaliation.

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“I don’t want France going out and taxing our companies. Very unfair,” Trump said, according to Politico. “And if they do that, we’ll be taxing their wine or doing something else.”

All of this occurs as Germany faces a possible recession and Britain sorts out its future in light of the Brexit fiasco. Germany’s economy is highly dependent on China, and an economic slowdown in China—which already is happening—would have a bad effect on Europe.

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To make matters worse, Trump in the recent past has threatened tariffs on European goods, too.

European Council President Donald Tusk urged Trump to avoid such tariffs.

“Trade wars among G7 members will lead to weakening the already eroding trust among us,” he said, according to Politico. “If the U.S. imposes tariffs on France, the EU will respond in kind ... We have to be ready for this bad scenario.”

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