Breaking. Wilbur Ross to Be Secretary of Commerce

This announcement come from the man himself

Phone conversation with President-elect. He appointed me as Commerce Secretary. I’m very honored and happy.

— Wilbur Ross (@RealWilburRoss) November 24, 2016

This is not totally unexpected. Ross has told confidants that he would take a position in the Trump administration:

The Wall Street Journal reports that Ross has told associates he’s likely to take an administration job and that it would mean the end of his business career because he would be forced to divest himself of his investment holdings. He declined to comment to POLITICO.

Ross is a billionaire. He owns his own private equity company. He served in an advisory capacity to President Bill Clinton on US-Russia trade. He advised NYC Mayor Rudy Giuliani on privatization. Ross was an early backer of Trump and seems to have had a hand in developing most of his economic policies:

Ross helped shape the Trump campaign’s economic agenda, particularly its hard-line stance on the need to renegotiate — or withdraw from — free trade agreements. Trump’s advisers have been split on that issue, which some economists warn could spark a damaging trade war, but Ross’s nationalist views are considered in line with the president-elect’s own.

Trump recently reiterated his pledge to withdraw from the sprawling Asian trade deal known as the Trans Pacific Partnership, which President Obama had hoped would be key part of his legacy. Trump has also threatened to pull out of the North American Free Trade Agreement, label China a currency manipulator and slap double-digit tariffs on imports from China and Mexico.

Ross built his fortune buying the distressed companies that were once at the heart of American manufacturing. Among his most notable investments was the purchase of some of the nation’s largest steel mills in the early 2000s, including Cleveland-based LTV Corp. and Pennsylvania’s Bethlehem Steel. Ross later sold his steel conglomerate to Mittal Group for about $4.5 billion.

Ross applied a similar strategy to other industries as well. His metallurgical coal company was headquartered in West Virginia, cobbled together from the remnants of bankrupt mining company Horizon Natural Resources and smaller coal companies. Shortly after the company went public in 2005, an explosion at its Sago Mine in West Virginia killed a dozen people. Ross sold the business to Arch Coal in 2011 for $3.4 billion.

And in the wake of the 2008 financial crisis, Ross purchased several failed banks, including BankUnited in Florida as well as some European banks.

An interesting observation comes from the John Podesta edited Politico:

His investments in steel, in particular, place him close to an industry that has waged an aggressive campaign of trade cases against foreign competitors. That could raise questions over whether he might benefit financially from favorable trade rulings by Commerce’s International Trade Administration, which determines retaliatory tariff margins.

In 2002, Ross created the International Steel Group by buying up beleaguered companies like LTV Steel and Bethlehem Steel Corp. for pennies on the dollar, only to sell the business for $4.5 billion in 2005 to Mittal Steel Co., which later merged with European steelmaker Arcelor to become ArcelorMittal. He still sits on the board of directors of that company, the world’s largest steelmaker. The company’s U.S. subsidiary has been an active petitioner in trade remedy cases.

If, as expected, Ross divests himself of his interest in his equity fund it is hard to see how he could profit from decisions by Commerce. On the other hand, his has shown himself more than willing to appeal to Commerce to ask for punitive duties in the case of trade abuses, like steel dumping. This is a good thing. For way too long we’ve worshiped at the altar of free trade for the sake of free trade. That is a loser’s philosophy. We need to ruthlessly impose penalties on foreign companies that dump products in the US and to the extent Ross will do that, it is a huge change from the past couple of decades.

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