USA TODAY International Edition
ROSS IS NEW FACE OF AMERICAN BUSINESS
As Commerce chief, he’ll lead the charge to get tough on trade
Wilbur Ross, tapped as the next Commerce secretary by President- elect Donald Trump, has been hailed as “the king of bankruptcy,” a nod to his legendary knack for buying troubled companies on the cheap and selling them for billions of dollars in profit.
The question is whether that enviable skill will transfer easily to his new, more nuanced and diplomatic role as the face of American business to the world. Some are optimistic.
“He has an exquisite sense of timing to buy low and sell high — that’s not easy,” says Gary Hufbauer, a senior fellow at the Peterson Institute for International economics. “He may be able to carry that over in diplomatic dealings.”
Ross, 79, a veteran private- equity investor whose wealth is estimated at $ 2.9 billion, is expected to lead the charge for Trump’s get- tough trade policy aimed at discouraging U. S. factories from moving abroad, luring some back and narrowing the nation’s $ 500 billion annual trade gap.
On the campaign trail, Trump threatened to label China a currency manipulator and slap tariffs of 45% on that country and 35% on Mexico.
Hufbauer, however, said tried- and- true business strategies are unlikely to hold sway with prickly foreign leaders. “You can’t think of China and Mexico as bankrupt companies,” he says. “Threats get China’s hackles up.” He adds that China has “liberalized ( its policy on imports) but they take their own sweet time about it.”
In a CNBC interview Wednesday, soft- spoken Ross downplayed the much- feared prospect of hefty import duties and trade wars. “Everybody talks about tariffs as the first thing. Tariffs are the last thing. Tariffs are part of the negotiation. The real trick is going to be ( increasing) American exports. Get rid of some of the tariff and non- tariff barriers to American exports.”
At the same time, Ross displayed a confident, no- nonsense approach that recognizes U. S. economic strength and leverage. He called the Trans- Pacific Partnership pact with Pacific Rim countries, which has not been ratified and Trump has vowed to kill, a “horrible deal.”
“We’ve been doing a lot of dumb trade, and that’s the part that’s going to get fixed,” he said.
“The problem with regional trade agreements is you get
picked apart by the first country, then you negotiate with the second, you get picked apart, and you go with the third one, you get picked apart again,” Ross added. “What has to be put into perspective — we are the big market, we are the world’s biggest importer, we need to treat the other countries as good suppliers, not as determining the whole show.”
Ross did not respond to a request for an interview.
As head of Commerce, Ross will oversee certain trade negotiations and disputes. Hufbauer says he could bring more trade cases against China and seek stiffer penalties for that country’s dumping of products at cut- rate prices in the U. S. While overseeing 47,000 employees and an $ 8 billion budget, Ross also will work with businesses, colleges and city governments to promote economic growth, create jobs and improve workers’ skills. And Commerce compiles troves of data on the U. S. economy, such as estimates of the gross domestic product, or economic growth.
Ross bloodless and practical negotiating style was honed over decades. He was raised in an affluent household in suburban New Jersey. At the elite Xavier High School in Manhattan, he ran track and was captain of the rifle team. He earned a bachelor’s degree from Yale College and a master’s from Harvard Business School. Ross came to deal with Trump as head of Rothschild’s bankruptcy advisory practice. He and billionaire investor Carl Icahn helped Trump save his Trump Taj Mahal casino hotel from collapse in the early 1990s.
After forming his own private equity firm in 2000 with $ 440 million in investor money, Ross commenced a series of canny buyouts. In the early 2000s, he purchased the beleaguered factories of Pennsylvania’s Bethlehem Steel, Cleveland- based LTV and other manufacturers, rolling them into a new company, International Steel Group, that was sold to Mittal Steel for $ 4.5 billion in 2004. He was credited with saving factory jobs at a time when other players steered clear of the struggling industry.
“Those companies were failing,” Ross said in a 2005 interview with the Philadelphia
Inquirer. “They would’ve been shut down. Bethlehem was days away from shutting down.”
He also scooped up the remains of beleaguered coal producers, but after his new company went public in 2005, an explosion at one of its mines in West Virginia killed 12 people. The mine had been cited with numerous safety violations. Ross said afterward he was aware of the problems but mine managers had assured him it was a “safe situation.” Ross sold the firm to Arch Coal in 2011 for $ 3.4 billion.
Ross adopted a similar investment strategy, with varying success, in textiles, banks after the financial crisis and, more recently, oil and gas companies.
Robert Scott, a senior economist for the liberal Economic Policy Institute, says he’s “guardedly optimistic” that Ross’ experience with steel companies and other victims of U. S. imports will help him defend U. S. trade interests and nurture the country’s manufacturers. But, he added, “At best, it will slow the loss of manufacturing employment.”
Ross, who lives in a Palm Beach estate with his third wife not far from Trump’s Mar- a- Lago club, has a renowned art collection valued at more than $ 100 million that features Belgian surrealist painter Rene Magritte.
“I think we need a more radical, new approach to government, at least in the U. S., from what we’ve had before,” Ross told CNBC in June.
“What has to be put into perspective — we are the big market, we are the world’s biggest importer, we need to treat the other countries as good suppliers, not as determining the whole show.” Wilbur Ross