President Donald J. Trump has invoked the Defense Production Act (DPA) in response to the pandemic of a new coronavirus disease, COVID-19. The Cold War–era law gives the president significant emergency authority to control domestic industries. Though Trump has used the law to crack down on hoarding, limit exports of medical goods, and increase production of critical supplies, some argue more could be done.
What were the origins of the Defense Production Act?
Passed in September 1950 at the start of the Korean War, the DPA was modelled on the War Powers Acts of 1941 and 1942, which gave President Franklin Delano Roosevelt sweeping authority [PDF] to control the domestic economy during World War II. The original DPA gave the president a broad set of powers including the ability to set wages and prices as well as ration consumer goods, though not all of these powers have been renewed. The law has been continually reauthorized by Congress, most recently in the John S. McCain National Defense Authorization Act of 2019. It is set to expire in 2025.
What does it do?
The current version of the law still gives the executive branch substantial powers. It allows the president, largely through executive order, to direct private companies to prioritize orders from the federal government. The president is also empowered to “allocate materials, services, and facilities” for national defense purposes, and take actions to restrict hoarding of needed supplies. To bolster domestic production, the president may also offer loans or loan guarantees to companies, subject to an appropriation by Congress; make purchases and purchase commitments; and install equipment in government or private factories. Companies can also be authorized to coordinate with each other, which might otherwise violate antitrust laws.
How has it previously been used?
U.S. presidents from Harry S. Truman to Barack Obama have delegated DPA powers to various parts of the government. In a 2012 executive order, Obama assigned DPA authority to sixteen federal departments and agencies.
The Defense Department has routinely used the law since 1950 to prioritize the fulfillment of its contracts, including for the president’s plane, Air Force One, and armored vehicles. The Pentagon estimates that it uses DPA authority to place roughly three hundred thousand orders per year [PDF] for a variety of military-related equipment. The Federal Emergency Management Agency (FEMA) also uses the law to respond to disasters such as hurricanes, bumping its orders for things like food and bottled water to the front of the line. The DPA was also used to supply natural gas to California during the 2000–01 energy crisis.
How has Trump used the DPA to respond to the coronavirus?
In response to the COVID-19 pandemic, Trump has employed a range of DPA powers. After initially hesitating, he ordered General Motors to produce ventilators and 3M to produce N95 respirator masks for the federal government. He issued an executive order to prevent hoarding of essential supplies and directed his administration to increase the domestic production capacity of essential health products using loans, loan guarantees, and other actions. The coronavirus economic stimulus package, or CARES Act, set aside $1 billion for DPA purchases by the Defense Department. The increased use of the law has led to calls for greater transparency in the procurement process.
In early April, Trump, lamenting “wartime profiteering by unscrupulous brokers, distributors, and other intermediaries,” issued another DPA directive “preventing the harmful export of critically needed” personal protective equipment (PPE), utilizing his authority under the DPA to allocate materials. This particular power had not been used since the Cold War. FEMA subsequently issued a rule requiring its approval of all exports of some PPE including N95 masks, surgical masks, and gloves. (Exports from companies that distribute 80 percent or more of these products in the United States and have long-standing contracts are exempt.)
Such export restrictions are controversial. CFR senior fellow Jennifer Hillman recently warned that they “clearly work to the detriment of the world’s ability to distribute these scarce medical resources to where they are needed most with the minimal amount of red tape.”
Responding to concerns about the supply of meat following several plant closures, Trump in late April used DPA authority to ensure that meat processing plants remain open amid the pandemic, declaring them “critical infrastructure.”
What other steps are possible?
Some have called for Trump to be even more aggressive in using the DPA. Senate Minority Leader Chuck Schumer, for example, has urged Trump to appoint a military official as a DPA czar to take over factories and coordinate production.
Trump has instead tapped his trade advisor, Peter Navarro, for the newly created position of National Defense Production Act policy coordinator. Navarro, a China hawk who has long decried the decline of U.S. manufacturing jobs, is reportedly eyeing this as an opportunity to achieve his goal of re-shoring some supply chains. That includes pushing for a so-called Buy American order that would require the government to buy U.S.-made drugs and medical supplies—a measure some trade experts argue could raise prices, lower innovation, and make American business less competitive.