Big Steel Sees Gold in Trump’s Commerce Secretary Wilbur Ross

Commerce Secretary Wilbur Ross has stepped back from his investments in big steel, but that doesn’t mean they won’t benefit greatly from the billionaire’s new perch.

Photo Illustration by Elizabeth Brockway/The Daily Beast

In his new cabinet post, billionaire investor Wilbur Ross will be in a position to advance the financial interests of a company that he helped create—a company in which he recently said he was heavily invested, and one that anticipates Ross will be very good for its bottom line.

The Senate easily approved Ross’s nomination as Commerce Secretary on Monday, and Luxembourg-based steel company ArcelorMittal welcomed the news. Ross helped build that firm, reported large equity stakes in it, serves on its board, and promises to pursue policies similar to the protectionist measures that helped make it the world’s largest steel producer.

“It is good to have such an accomplished businessman in government; our leadership feels he is very well placed to shape policy that promotes economic growth,” a spokesperson said in an emailed statement. “ArcelorMittal supports [Trump’s] agenda and looks forward to working with the new administration on comprehensive solutions to revitalize manufacturing in the U.S. and further protect the industry from unfair trade practices.”

Ross stepped down from ArcelorMittal’s board on Wednesday, the company announced. He has also said he will divest his equity holdings, which total between $750,000 and $1.5 million. Neither a Ross spokesman nor Commerce’s press office responded to questions about the schedule of that divestment.

Personal financial disclosure forms filed with the Office of Government Ethics say that Ross has been on the company’s board since 2008, and that he earned about $107,000 in “director fees” last year (PDF). Company documentation says otherwise: According to its recent SEC filing, Ross has been on the board since 2005. He earned $171,000 last year and $180,000 the year before.

Ross is an architect of the Trump administration’s economic and trade policies (PDF). However he treats his ArcelorMittal investments going forward, those investments stood to gain from policies he authored for the Trump campaign at the time they were authored.

Those proposals will now inform his new role at Commerce, where Ross will oversee areas of economic policy that stand to affect ArcelorMittal’s bottom line, including infrastructure spending, trade restrictions, and even sanctions on Iran, where ArcelorMittal subsidiaries do business.

His role in ArcelorMittal’s creation and continued operation embodies the symbiotic and highly profitable relationship between private investment and government policy. Ross bought up bankrupt American steel companies, consolidated them weeks before the federal government imposed protectionist tariffs on foreign competitors, then sold them off to a foreign company.

That role also provides a stark contrast to his public pronouncements on the political economy, which struck a populist tone before populism was a dominant force in American politics. He was an early articulator of the forces behind Trump’s rise.

“Corporate America, big corporate America at any rate, is in much better shape than Mr. and Mrs. America,” Ross lamented at a May 2011 panel discussion on the relationship between Main Street, Wall Street, and the Beltway.

“Mr. and Mrs. America’s balance sheet is still destroyed by the erosion of real estate, median income adjusted for inflation has gone nowhere in 10 years, and to me that’s the really big problem, and it’s the real reason that Main Street hates both Beltway and Wall Street. They feel they haven’t participated in the economy.”

Like Trump, Ross takes a particularly hard line on trade with China. That puts him in line with ArcelorMittal’s business interests. Its CEO Lakshmi Mittal, who predicted that Trump would be “good for us,” told The Wall Street Journal last month, “I hope that with Trump’s new administration, strong trade actions will help to address to China’s overcapacity.”

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Ross has also backed additional federal infrastructure spending, a move expected to benefit ArcelorMittal. He will be leading a department with oversight over licensing requirements for companies doing business in Iran. ArcelorMittal disclosed in a recent Securities and Exchange Commission filing that it has extensive business interests in the country through European and Asian subsidiaries, and is closely monitoring the status of sanctions lifted by the 2016 Iran nuclear deal.

Ross’s work for Trump has occasionally revealed his personal financial interests in his policy proposals. He co-authored a report on the Trump campaign’s trade and regulatory agenda that mentioned the damage done by Chinese trade practices to “Bethlehem and 30 other steel companies” (PDF). The specific mention of Bethlehem Steel wasn’t happenstance: The company was one of a handful that Ross had bought up in the early 2000s to form the International Steel Group (ISG).

His steel buying spree began in February 2002 with ISG’s purchase of LTV Group’s steel division. Less than a month later, President George W. Bush announced new tariffs on imported steel. Ross later said that he knew the tariffs were coming.

“We talked to everyone in Washington,” he said. “I had read the International Trade Commission report, and it seemed like it was going to happen.” ISG quickly bought up Bethlehem and another steel company, Acme Metals.

Bush rolled back the tariffs in late 2003 after Japan and the European Union threatened to spark a trade war with billions of dollars in sanctions levied on American exports. But the prospect of those retaliatory measures showed how protectionism designed to shore up American could backfire on other U.S. companies, their employees, and their customers.

Trump’s hardline trade policy is a hallmark of his policy platform, and Ross has aggressively promoted punitive trade actions against China, among other nations, and backed government policies that, in his words, “decide which industries are we going to really promote” and then promote them.

By the time Bush rolled back his tariffs, the U.S. steel industry had undergone a huge consolidation effort and Ross had created an industry behemoth. But his revamped ISG didn’t stay in American hands.

In late 2004, Ross sold most of his stake in the company to Dutch firm Ispat Steel, which renamed itself Mittal Steel after its Indian founder and chief executive. Ross and his investors earned about $2 billion in the deal. In 2006, Mittal, then the world’s largest steel company, merged with Luxembourg’s Arcelor, the second-largest.

Ross will now be in a position to directly affect “which industries we are going to really promote,” and one of the major beneficiaries could be ArcelorMittal, the company he incubated, sold, and helped run in the years since.

A strategy of national industrial planning has worked out well for deep-pocketed investors such as Ross, who are able to effectively navigate the halls of political power, and major multinationals like ArcelorMittal, who benefit directly from that planning.