According to Bloomberg, the Trump administration is considering using the International Emergency Economic Powers Act (IEEPA) to block Chinese investments in industries or technologies “deemed important” to the U.S. (This statute has been used primarily to authorize economic sanctions and embargoes administered by the Office of Foreign Assets Control). To utilize IEEPA, the President must first declare that there is a national emergency in response to an “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 were to declare a national emergency aimed at Chinese investment it would mark the first time IEEPA has been used to address unfair trade practices.
This development is the latest in a series of steps taken by the Trump administration to curtail Chinese investment in the U.S. The recently proposed Foreign Investment Review Modernization Act (“FIRRMA”) would expand the jurisdiction of the Committee on Foreign Investment in the United States (“CFIUS”) to include investments in “critical technology” and “critical infrastructure”, and would also make it easier for regulatory agencies to review investments made by state-owned enterprises. This legislative proposal is largely viewed as focused on regulating Chinese investment. The Trump administration already exercised existing CFIUS-related authority to block the acquisition of Lattice Semiconductor Corp. by Canyon Bridge Capital Partners, a Chinese firm.