[News Terms] Will the 'Emergency Economic Act' Become Trump-Style Tariff Bomb?

Donald Trump, the former U.S. president and Republican presidential candidate, is analyzed to potentially use the International Emergency Economic Powers Act (IEEPA) to implement high tariff policies if he succeeds in his re-election bid.

[Image source=Yonhap News]

Yeo Han-gu, former head of trade negotiations at the Ministry of Trade, Industry and Energy, recently stated in an interview with Asia Economy, "If the Trump second-term administration materializes, it is highly likely that all means, including the International Emergency Economic Powers Act (IEEPA), will be used to raise tariffs and leverage negotiations to obtain concessions from trading partners."

Earlier, Robert Lighthizer, former U.S. Trade Representative (USTR) and considered a key figure in Trump’s trade policy, said in an interview with The New York Times at the end of last year, "Considering the scale of the U.S. trade deficit and its impact on the U.S. economy, the president has clear authority under the International Emergency Economic Powers Act and the Tariff Act to unilaterally impose tariffs."

The International Emergency Economic Powers Act is a law enacted in 1977 that allows the president to take economic measures such as prohibiting transactions or confiscating assets against targeted countries and their nationals in emergency situations where there is a significant threat to U.S. security, foreign policy, or economy. It was established to enable the U.S. to respond quickly and effectively to international emergencies.

The scope of sanctions the president can impose when declaring a national emergency is broad. The president can order investigations, regulations, or prohibitions on foreign exchange transactions or financial activities related to specific countries, organizations, or individuals involved in certain activities, and can freeze or seize assets under U.S. jurisdiction belonging to those countries. The U.S. sanctions against North Korea are also based on this law.

Although the law grants the president extraordinary powers during national emergencies, its actual invocation is strictly limited by conditions. Before declaring a state of emergency, the president must consult with Congress, and after IEEPA is declared, the president must report to Congress on special measures and the initiation of financial asset seizures against countries in conflict with the U.S. This strict regulation was established because the law was created as a congressional check on the broadly granted powers under the Trading with the Enemy Act.

However, contrary to its original intent, IEEPA has recently been used by the U.S. to pressure hostile forces or as a bargaining chip in international trade disputes. A representative example is when former President Trump cited this law as the basis for retaliatory tariffs against Mexico and China during his administration. If a second Trump administration, which has signaled high tariffs, takes office, it is highly likely that IEEPA will be used as leverage in trade negotiations.

This content was produced with the assistance of AI translation services.