Under Trump, Made in America Is Losing Out to Russian Steel

Four days after his inauguration, Donald Trump signed a handful of executive memos to advance the Keystone XL pipeline and revive the U.S. steel industry. He invited builder TransCanada Corp. to reapply for a permit denied by Barack Obama and ordered up fast-track rules forcing not only Keystone but also all new U.S. pipelines to be made from American steel. “From now on, we’re going to be making pipeline in the United States,” he said.

Made-in-America Keystone was a stunt. Most of its pipes had already been manufactured, a fact the White House grudgingly admitted when it exempted the project from any new Buy American rules a few months later. While some of Keystone’s pipes were made in the U.S., at least a quarter of them came from a Russian steel company whose biggest shareholder is an oligarch and Trump family friend. The company, Evraz North America, supplied Keystone from its steel plants in Canada and for years has lobbied in Washington against Trump-style protectionism.

Ten months after his Keystone event, Trump has yet to deliver on his pledge to boost the fortunes of American steel. Two self-imposed deadlines for trade action, one in June and one in July, have come and gone. Meanwhile, the prospect of tariffs has led to a surge of cheap foreign steel into the U.S., with imports rising 24 percent in 2017, the fastest increase in years.

As federal and congressional investigators probe Moscow’s interference in the 2016 U.S. election, Evraz North America shows that Russians are also involved in pressing against one of Trump’s main campaign promises. The company is a wholly owned subsidiary of Evraz Plc, Russia’s second-largest steelmaker. It has two factories in the U.S., in Colorado and Oregon, and four in western Canada, where it produces steel and large-diameter steel pipe. The company’s top shareholder is Roman Abramovich, a billionaire who owns 31 percent of Evraz’s stock. In 2005 he was the first oligarch allowed to sell his oil company to the state, taking in $13 billion in a deal approved by Vladimir Putin.

Abramovich’s ties to the Trumps stem from a decade-long friendship between Ivanka Trump and Abramovich’s wife, Dasha Zhukova, from whom he announced a separation in August. Jared Kushner and his brother, Joshua, invested in Zhukova’s art collection business. The Russian couple hosted Ivanka and Jared in Russia in 2014, when they shared a table at a fundraiser for Moscow’s Jewish museum. Zhukova went to the 2016 U.S. Open tennis tournament with Ivanka and attended Trump’s inauguration as Ivanka’s guest.

From left, Ivanka Trump and Dasha Zhukova attend the U.S. Open men’s singles final on Sept. 11, 2016, in Queens, N.Y.
Photographer: Elsa/Getty Images

Evraz won its share of the Keystone XL business in 2009 and hired a Washington lobbyist named John Stinson the next year, according to disclosures collected by Bloomberg Government and Open Secrets, a nonprofit that tracks money in politics. Over the next seven years, Stinson lobbied the House, Senate, U.S. Department of Commerce, and Office of the U.S. Trade Representative, earning $2.2 million for representing Evraz’s interests. He fought Buy American language in federal spending bills for transportation, water infrastructure, and defense, as well as in a bill specifically about Keystone in 2015—the same year Obama denied its cross-border permit.

According to federal disclosures, Evraz paid Stinson $100,000 in the first half of 2017 to persuade Congress and the Commerce Department to exclude its Canadian products from Trump’s steel import crackdown. Stinson declined to comment. Christian Messmacher, the company’s vice president for development, says its lobbying efforts are typical for the industry. “We, like all other North American companies, work to provide public officials with our insights on issues that affect us and our ability to provide good North American jobs,” he says.

In late May, Evraz won a contract with liquefied natural gas company Cheniere Energy Inc. to supply the steel pipe for a 200-mile pipeline to bring natural gas from Oklahoma to the Gulf Coast. The contract, worth an estimated $100 million, was expected to go to a Florida-based company, Berg Steel Pipe Corp., according to the American Line Pipe Producers Association. The association put out a press release in June arguing that Evraz was undercutting U.S. companies. It asked the Trump administration to act quickly on new rules and stop “Russian-owned Evraz” from “aggressively” seeking U.S. contracts ahead of any new tariffs or quotas on imports.

The Cheniere contract shows how hard it is to differentiate between foreign and U.S.-made steel. While losing out to Evraz cost Berg 216 jobs, or 42 percent of its workforce, company Vice President Jonathan Kirkland told the Mobile, Ala., in June, Berg makes pipelines using steel from Germany and France. U.S. steel supplies aren’t reliable enough, Chief Executive Ingo Riemer told the U.S. International Trade Commission last year.

In September, Commerce Secretary Wilbur Ross said the administration will defer a decision to impose tariffs on foreign steel so it can focus on tax reform. The industry is getting impatient. Steel executives have been meeting with administration officials. More than 60 steelworkers met with members of Congress on Sept. 21 to tell them of their growing frustration with the White House’s delays. “The president makes his policy decisions based on what is best for the American people,” says White House Deputy Press Secretary Lindsay Walters. “Moreover, to place unrelated information about his daughter’s social engagement with the ex-wife of one of a company’s shareholders in a story about actual policy is incredibly irresponsible and misleading.”

Given the promises Trump made in the campaign, there may be political blowback if he doesn’t deliver. Although the United Steelworkers union endorsed Hillary Clinton, many of its members voted for Trump, helping him to narrow victories in states across the Midwest. “Those workers absolutely won’t forget if they are empty promises,” says Dan Simmons, president of Steelworkers Local 1899 in Granite City, Ill. “Like Elvis says, we want a little less talk and a little more action.”

    BOTTOM LINE – Foreign steel imports into the U.S. are up 24 percent in 2017. As the industry grows angry at Trump’s lack of trade action, Russia’s Evraz continues winning pipeline contracts.

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    Tags: Barack Obama businessweek Canada DEPARTMENT OF COMMERCE Donald John Trump EVRAZ PLC Imports John T Stinson Steel Industry U.S. Open 2016 White House

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