What you need to know about the Defense Production Act and why it matters to the coronavirus pandemic

U.S. President Donald Trump, flanked by U.S. Vice President Mike Pence and FEMA Administrator Pete Gaynor, speaks during a news conference, amid the coronavirus disease (COVID-19) outbreak, in Washington D.C., U.S., March 22, 202

  • President Donald Trump is under a lot of pressure to use the Defense Production Act to help the US with its coronavirus response.
  • The law gives Trump broad powers to pressure the private sector into producing materials necessary to aid the national defense.
  • Trump has invoked the Korea War-era law, but has not yet used it in any material way.
  • Visit Business Insider's homepage for more stories.

President Donald Trump is under mounting pressure from governors and congressional lawmakers in both parties to stop flirting with tapping into the powers granted to him via the Defense Production Act and fully use it to help the country with its response to the coronavirus pandemic.

Trump and his officials have sent confusing, mixed messages about the law. Advertisement

"The Defense Production Act is in full force, but haven't had to use it because no one has said NO! Millions of masks coming as back up to States," Trump tweeted on Tuesday, March 24.

The same day, FEMA said it was using the law to obtain test kits for the virus, only to backtrack later on.

Meanwhile, Gov. Andrew Cuomo of New York has implored Trump to use the Defense Production Act to help the state gain desperately-needed ventilators, slamming the president for saying he's a "wartime president" but not acting like it.
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"President said it's a war. It is a war. Well then act like it's a war," Cuomo said on Tuesday. "Only the federal government has that power and not to exercise that power is inexplicable to me ... I do not for the life of me understand the reluctance to use the federal Defense Production Act."

Here's what the Defense Production Act does

The Defense Production Act (DPA) of 1950 is a Korean War-era law that gives the president the power to pressure US industries into producing supplies for the national defense. "Through the DPA, the President can, among other activities, prioritize government contracts for goods and services over competing customers, and offer incentives within the domestic market to enhance the production and supply of critical materials and technologies when necessary for national defense," according to the Congressional Research Agency (CRS).Advertisement

The DPA was originally intended to bolster US military capabilities, but has been expanded to help the US deal with natural hazards, terrorist attacks, and other national emergencies.

The law has three primary sections that grant the president various powers, per the CRS:

  1. "Priorities and Allocations, which allows the President to require persons (including businesses and corporations) to prioritize and accept contracts for materials and services as necessary to promote the national defense."
  2. "Expansion of Productive Capacity and Supply, which allows the President to incentivize the domestic industrial base to expand the production and supply of critical materials and goods. Authorized incentives include loans, loan guarantees, direct purchases and purchase commitments, and the authority to procure and install equipment in private industrial facilities."
  3. "General Provisions, which includes key definitions for the DPA and several distinct authorities, including the authority to establish voluntary agreements with private industry; the authority to block proposed or pending foreign corporate mergers, acquisitions, or takeovers that threaten national security; and the authority to employ persons of outstanding experience and ability and to establish a volunteer pool of industry executives who could be called to government service in the interest of the national defense."

Why Trump hasn't used the DPA

The president invoked the DPA via an executive order last Wednesday.Advertisement

"I invoked the Defense Production Act, and last night we put it into gear," Trump said on Friday, March 20. "We are invoking it to use the power of the federal government to help the states get things they need like masks and ventilators."

But the president has flip-flopped on this, even as governors like Cuomo have pleaded with him to help states obtain vital medical equipment, including protective gear for frontline medical workers.

"We're a country not based on nationalizing our business," Trump said on Sunday, March 22, at a press briefing. "The concept of nationalizing our businesses is not a good concept." The law does not nationalize businesses. Advertisement

Trump also suggested that companies would struggle to produce medical equipment like ventilators, which helps patients breathe when they're struggling to on their own. "Nobody would know where to start," Trump said. "If I call companies and say, 'You build ventilators,' they don't even know what a ventilator is."

"We have the threat of doing it, if we need it," Trump said. "But we have millions of masks being done. We have respirators. We have ventilators. We have a lot of things happening right now. So just the threat of using it."

"We are using it now. The fact that I signed it, it's in effect," Trump added, though the law is not actually being used. Advertisement

In short, Trump is not fully leaning into the DPA because he claims the private sector is stepping up to fill the gaps in terms of necessary supplies.

"General Motors, Ford, so many companies - I had three calls yesterday directly, without having to institute like: `You will do this' - these companies are making them right now," Trump said Saturday. But this was false, and no automaker in the US is close to building such equipment at the moment. But Cuomo on Tuesday said that his state, which is the epicenter of the pandemic in the US, is still in dire need of ventilators. He said New York has about 3,000 to 4,000 ventilators and has purchased about 7,000 more, but needs 30,000 to deal with the scale of the outbreak.Advertisement

As of Wednesday, March 25, there were over 26,000 confirmed coronavirus cases in New York state, comprising roughly half of all cases (over 55,000) in the US.

Get the latest coronavirus analysis and research from Business Insider Intelligence on how COVID-19 is impacting businesses.

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