Key takeaways

• President-elect Trump has promised to bring about seismic changes in the positions of the United States on various international arrangements, ranging from international trade agreements and global climate change agreements to the Iran Nuclear Deal. A key question is the power of Mr. Trump as President to carry out promises of wholesale U.S. withdrawal.
• Mr. Trump will be vested as President with broad Constitutional power to act in the sphere of foreign affairs, but that Executive power is not absolute.
• In particular:
  • NAFTA and WTO agreements explicitly allow countries to withdraw, but a unilateral withdrawal by Mr. Trump may not pass Constitutional muster, particularly if Congress were formally to oppose it. U.S. withdrawal would significantly affect U.S. companies’ ability to access foreign markets and to challenge adverse actions by foreign sovereigns.
  • Under the recent Paris Agreement addressing global climate change, a U.S. withdrawal should have no effect until at least November 2020, the time of the next Presidential election. An attempt to circumvent this requirement by withdrawing the United States from the underlying 1992 treaty would face U.S. Constitutional obstacles.
  • The Iran Nuclear Deal is a “political commitment,” not a legally binding agreement, which means that Mr. Trump as President can unilaterally and immediately withdraw Washington’s commitments under the deal. However, a U.S. withdrawal would not automatically unravel the deal, as the other countries and the EU could keep it in force if they can use their own threat of sanctions to pressure Iran to stay in. The deal’s ultimate fate is unclear, but the risk of disruption for companies that may have reinitiated trade with Iran is high.