How Donald Trump Ditched U.S. Steel Workers in Favor of China
By Kurt Eichenwald 10/3/16
Plenty of blue-collar workers believe that, as president, Donald Trump would be ready to fight off U.S. trade adversaries and reinvigorate the country’s manufacturing industries through his commitment to the Rust Belt. What they likely don’t know is that Trump has been stiffing American steel workers on his own construction projects for years, choosing to deprive untold millions of dollars from four key electoral swing states and instead directing it to China—the country whose trade practices have helped decimate the once-powerful industrial center of the United States.
A Newsweek investigation has found that in at least two of Trump’s last three construction projects, Trump opted to purchase his steel and aluminum from Chinese manufacturers rather than United States corporations based in states like Pennsylvania, Ohio, Michigan and Wisconsin. In other instances, he abandoned steel altogether, instead choosing the far-less-expensive option of buying concrete from various companies, including some linked to the Luchese and Genovese crime families. Trump has never been accused of engaging in any wrongdoing for his business dealings with those companies, but it’s true that the Mafia has long controlled much of the concrete industry in New York.
Throughout his campaign, Trump has maintained that some controversial decisions for his companies amounted to nothing more than taking actions that were good for business, and were therefore reflections of his financial acumen. But, with the exception of one business that collapsed into multiple bankruptcies, Trump does not operate a public company; he has no fiduciary obligation to shareholders to obtain the highest returns he can. His decisions to turn away from American producers were not driven by legal obligations to investors, but simply resulted in higher profits for himself and his family.
Hope Hicks, a spokeswoman for the Trump campaign, did not return an email seeking comment.
Of Trump’s last three construction projects, the first to use Chinese steel was Trump International Hotel Las Vegas, which opened in 2008. That the manufacturer is from China is not immediately evident; this fact is hidden within a chain of various corporate entities, including holding companies registered in the British Virgin Islands. That micro-state is a popular site for obscure off-shore entities that exist only on legal documents, limiting the potential liability of real businesses while obscuring their true owners.
According to government documents, the Chinese entity chosen by Trump to provide steel for the Las Vegas property is a holding company called Ossen Innovation Co. Ltd.–formerly known as Ultra Glory International Ltd. That British Virgin Islands entity in turn owns a second holding company called Ossen Innovation Materials Group Ltd., which, through a complex legal arrangement, indirectly owns Ossen Innovation Materials Co. Ltd., and through it, Ossen (Jiujiang) Steel Wire & Cable Co. Ltd., the operating business located in Shanghai. With such layers upon layers of corporate shells and divisions, builders like Trump can purchase their steel from less-expensive Chinese suppliers without the ultimate supplier being readily apparent. That steel was then used in the construction of the Las Vegas property.
When Americans like Trump purchase their steel through Ossen, they are providing financial benefits to an array of Chinese companies and even the government. For example, Ossen corporate records show Chinese banks provide all of its short-term financing in the form of loans that almost all mature after one year, and then are replaced by new loans; most Chinese banks are arms of the state, tightly controlled by the Chinese Communist Party, and provide financing to companies that are competitors to American manufacturers in other industries. (For example, the Chinese companies that manufacture suits and ties for the Donald Trump Signature Collection also obtain loans from mainland banks; Trump has said he has been forced to use the Chinese for his clothing lines because no American company makes those kinds of products anymore. That is not true—for example, all Brooks Brothers ties are made in New York, while about 85% of the company’s suits are made in Massachusetts.)
Another recent Trump building that has used metal from China is Trump International Hotel and Tower in Chicago, which opened in 2009. For that project, Trump obtained loans from Deutsche Bank and three hedge funds that in turn used financing from George Soros, the business magnate who is the subject of many conservative conspiracy theories and is portrayed as a threat to the Republican Party.
The building required tons of aluminum and Trump elected not to purchase the metal from Alcoa or any other similar American producer, but instead turn to a subsidiary of a Chinese aluminum manufacturer. Because American businesses have been turning to cheaper aluminum from overseas, the industry is collapsing. For example, in just the last two years, more than half of the country’s aluminum smelters in states like Ohio, West Virginia and Texas have closed as a result of being undercut on price by competition from overseas.
Trump purchased the aluminum used in the Chicago project for what is called the “curtain wall”—the glass and metal exterior designed to save energy. The wall is made with 11,500 panels of thermal pane glass encased in aluminum. Each of the panels is 6 feet, 3 inches, meaning they used 207,000 feet of aluminum; the precise amount of tonnage could not be determined. However, assuming an admittedly light weight of a pound per foot, American companies lost out on more than $350 million in sales.
For the Chicago project, tracing the metal back to China is once again a difficult process. To construct the exterior panels, Trump hired an entity called Permasteelisa Cladding Technologies Ltd., which is based in Connecticut. That company, in turn, is a division of Permasteelisa North America Corp., which, despite its name, has been identified by the American government as an importer of steel, aluminum and other metals from its affiliated companies, Permasteelisa South China Factory and Permasteelisa Hong Kong Limited.
During the time of the Trump Chicago construction, according to documents filed with the United States Court of International Trade by the Department of Justice and the Department of Commerce, Permasteelisa was dumping aluminum used in curtain walls, meaning it was using predatory pricing to sell the products below the cost of production or the amount charged in China. The beneficiaries of trade dumping are users of the material, like Trump, who save significant sums of money on construction, thus increasing their profits. The losers are the American competitors like aluminum producers who cannot possibly compete with foreign companies that are willing to take losses on the sales of their building materials in hopes of driving companies in the United States out of business.
Trump has not committed any crimes by purchasing his steel and aluminum from China, nor did he engage in wrongdoing by using Chinese textile factories to make his clothing lines. But, given the only beneficiaries of his decisions to go with cheaper Chinese metals for his construction project are Trump and his family, he is not someone who ever attempted to lead by example by only buying products made in America. He filled his bank accounts with millions of dollars that could have gone to blue-collar workers, many of whom now believe he is the man who will bring back the jobs that he secretly helped to destroy,
Prospects dim for Trump NAFTA victory before midterms
"Trade Wars Are Destructive. Of Course Trump Wants One."
Robert Lighthizer is rapidly reaching the point where it will no longer be possible to reach a trade deal in time for U.S. lawmakers to vote this year. Peter McCabe/Getty Images
By MEGAN CASSELLA and DOUG PALMER
03/05/2018 08:13 PM EST
MEXICO CITY — President Donald Trump is running out of time to make good on a high-profile campaign promise to have a reworked NAFTA completed this year with congressional approval.
His chief trade negotiator acknowledged as much on Monday as the seventh round of talks with Mexico and Canada wrapped up here. He ticked off the coming Mexican presidential elections on July 1, elections in Ontario and Quebec and, of course, the looming midterm elections in the U.S. in November.
"We continue to stress the need to act quickly," U.S. Trade Representative Robert Lighthizer said during a news conference at the end of the seventh round of talks on revamping NAFTA in Mexico City.
Trump won election in 2016 vowing to pull out of NAFTA, which took force in 1994, unless Canada and Mexico agreed to renegotiate the pact. His anti-NAFTA message particularly resonated in rust belt states like Ohio, Pennsylvania and Michigan. If he fails to deliver on NAFTA changes, union and other traditionally Democratic voters who backed him in the 2016 election would have little incentive to cross party lines again to help him hold on to Republican majorities in both the House and the Senate during the midterms.
But as soon as the talks began last August, it was clear that there was little hope of striking a final deal by the end of 2017. Instead, Canada and Mexico strongly resisted a number of controversial U.S. proposals to drastically change the terms of the pact in areas like auto trade, investment protections and government procurement.
That pushed the talks into 2018, with countries agreeing to an informal deadline of March 31 in the hopes of wrapping up a tentative deal before political campaigning was in full force in the three countries. Now, after many rounds of talks involving hundreds of trade officials, only six out of 30 chapters have closed.
Consequently, Trump could head into the midterms without achieving a victory on one of his signature campaign issues. That's because of the 2015 Trade Promotion Authority, or TPA, a law that requires the U.S. Trade Representative's office to follow a number of steps in order to submit NAFTA 2.0, or any trade agreement, to Congress for a straight up-or-down vote without any amendment.
Lighthizer is rapidly reaching the point where it will no longer be possible to reach a deal in time for U.S. lawmakers to vote this year. Faced with that possibility, Trump might be tempted to give six-months' notice that he is withdrawing from the pact, despite the concerns that would raise among business leaders and Republicans.
“The thing I think we haven’t focused on enough is the combination of our midterm elections and the TPA timing,” Lighthizer told reporters in Mexico City, referring to fast-track legislation. “It’s seven or eight months, best-case scenario, between agreement in principle and voting."
Lighthizer must formally notify Congress 90 days before signing the final NAFTA 2.0 agreement. In addition, once the agreement is signed, the U.S. International Trade Commission must do a study on its economic impact. It has 105 days to complete the report. That's a combined period of 195 days.
So, even if a deal is reached at the next round in April, the earliest Congress is likely to vote on the pact is in October.
If talks conclude in the next “month, or month and a half or something,” then it would still be possible to push the deal through Congress in time to get a vote on it during the lame-duck session, before the new members took office, Lighthizer said. But “if we don’t get something done in the next month or two, we’re going to be in a position where it’s going to be pushed into the next year,” he said.
However, congressional leaders may be reluctant to put the agreement to a vote shortly before the November midterms, particularly if the terms of the deal are at all contentious.
In addition, Mexican presidential candidates will begin formal campaigning in April ahead of a July vote, although the current administration of Enrique Peña Nieto has until Nov. 30 to continue negotiations.
Negotiators closed three more chapters in Mexico in recent days, covering the issues of: good regulatory practices, administration and publication, and food safety and animal and plant health measures. Still, that brings the total number of closed chapters to six, just one-fifth of the expected 30 or more chapters expected in the final agreement.
The top trade officials of all three countries, however, emphasized that some outstanding issues could be wrapped up quickly. For example, negotiators are already close to finishing work in a number of other areas such as telecommunications, digital trade, state-owned enterprises and financial services, and have agreed to add a new chapter on energy to the agreement, Mexican Economy Minister Idefonso Guajardo said.
The negotiation “does not depend on political calendars or the nature of the presidential elections. It’s the responsibility of the government to stay at the negotiating table until something is accomplished,” Guajardo told reporters at the close of the talks.
Further complicating the timeline, Trump vowed last week to impose a 25 percent tariff on steel and 10 percent tariff on aluminum from countries around the world, including Canada and Mexico. The two free trade partners were excluded from similar tariffs imposed by former President George W. Bush in 2002, which were eventually struck down.
Trump said on Monday that Mexico and Canada could avoid those tariffs by agreeing to a new NAFTA deal. But that’s the equivalent of Trump saying, “If you want me to obey the old [NAFTA] rules, you’ve got to agree to new ones,” Phil Levy, a senior fellow at the Chicago Council on Global Affairs, said, quoting a joke floating around on Twitter.
Both Mexico and Canada have protested the idea of being included in the steel tariffs, with Guajardo calling it the “wrong way” to incentivize the creation of a new NAFTA. Robert Lighthizer is pictured. | AP Photo
Canada also reminded the U.S. that it is a crucial military ally. "As the No. 1 customer of American steel, Canada would view any trade restrictions on Canadian steel and aluminum as absolutely unacceptable,” Canadian Foreign Minister Chyrstia Freeland added. “Should restrictions be imposed on Canadian steel and aluminum products, Canada will take appropriate responsive measures to defend our trade interests and workers."
But she also offered an upbeat assessment of the progress of the talks.
"We are beginning to make headway on some of the more challenging issues. At Round 6 in Montreal, Canada offered creative ideas to initiate a discussion about these areas. That discussion has been constructive and it continued here in Mexico City. We are making progress, but we do have significant work ahead," Freeland said.
Lighthizer acknowledged the difficult political calendars coming up for each of the three countries and said he understands “that these talks are not easy for anyone.”
"Each of us has our own political concerns,” he said. "But we are at the point where we have very important decisions to be made."
RBA's Philip Lowe slams Donald Trump tariffs as 'highly regrettable bad policy'
Business Summit Mar 7 2018 at 9:50 AM Updated 9 mins ago
PHOTO Reserve Bank of Australia governor Philip Lowe addresses the Australian Financial Review Business Summit on Wednesday morning. Louie Douvis
Jacob Greber AFR Woodcut
by Jacob Greber
Reserve Bank of Australia governor Philip Lowe has blasted Donald Trump's tariff plan as "highly regrettable and bad policy" and criticised the president's use of gaping budget deficits to fund company tax cuts.
In a series of hard-hitting remarks, Dr Lowe told The Australian Financial Review Business Summit that the lessons of history are "very clear" in showing that protectionism is "very costly" for the country that implements such barriers.
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