A vendor waits for customers at a steel pipe shop in Hefei, China / Yahoo Finance
By Kurt Eichenwald / 10.03.2016
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,