Commerce Secretary Wilbur Ross says tariffs will be good for the American steel industry—just as they were for Mr. Ross himself during his business career.
Profiting from such protectionist measures was a trademark of some of the biggest deals in Mr. Ross’s rise as an investor specializing in reviving and flipping bankrupt or distressed companies, from steel mills to textile factories. In the process, Mr. Ross won plaudits for getting some steel operations reopened, as well as criticism for the way his corporate restructurings off-loaded pension obligations, reduced employees and gutted work rules.
Since January, Mr. Ross has become a leading pitchman for the administration’s plan to impose new duties on imported steel, despite warnings from many in business and the president’s own party that such moves risk a trade war and could hurt economic growth.
“I think this is scare tactics by the people who want the status quo, the people who have given away jobs in this country, who’ve left us with an enormous trade deficit and one that’s growing,” Mr. Ross said in a television appearance last week, referring to tariff critics. The trade deficit “grew again last year, and if we don’t do something, it will keep growing and keep destroying American jobs.”
In the CNBC appearance, he brandished cans of Budweiser and Campbell’s Soup while rebutting arguments that the tariffs would lead to higher prices for consumers.
Mr. Ross has supported tariffs throughout his career, a former business associate said. That is driven by Mr. Ross’s preference for investing in commodities like steel and basic industrial businesses that benefit from such measures, the associate said. As an investor, Mr. Ross was talking his own bookin backing tariff implementation, this person said. Mr. Ross decided to help Donald Trump, backing his campaign and joining his administration, almost solely because of the candidate’s stance on tariffs, the person said.
Mr. Ross, 80 years old, has been on something of a victory lap after what had been a rocky first year in the administration, according to the former associate and people familiar with Mr. Ross’s position in the administration.
But that followed months in which Mr. Trump had grown frustrated with Mr. Ross, angered that the commerce secretary was gaining notoriety from press reports that he had overstated his personal wealth and other incidents, including a propensity to nod off in meetings.
Mr. Ross has also at times been an idiosyncratic spokesman for the president.
Last June, Mr. Ross drew puzzled reactions at a conference when he said that the shortage of U.S. manufacturing workers could be solved with “open sessions with cocktails and hors d’oeuvres” for high-school students and their parents to talk up the positive aspects of factory work. In remarks in April, Mr. Ross referred to a missile attack on Syria, which happened while Mr. Trump was hosting China President Xi Jinping at Mar-a-Lago, as “after-dinner entertainment.”
But White House officials said this week that Mr. Ross had been effective in pressing for Mr. Trump’s tariffs.
“The president has always seen Secretary Ross as among the strongest and most effective fighters for the American worker and American industries,” White House spokesman Raj Shah said in a statement provided by the Commerce Department.
One White House official said of Mr. Ross’s CNBC appearance, “There was a little confusion about the cans.”
Tariffs are a policy Mr. Ross knows well. Some of his most successful deals began in early 2002, when his W.L. Ross & Co. purchased steelmaker LTV Corp. out of bankruptcy for $125 million, just as the administration of President George W. Bush prepared to slap tariffs on steel imports to shore up the flagging U.S. industry.
Mr. Ross said at the time that he made his bet on LTV in anticipation that the Bush administration would intervene to prop up the industry with three-year tariff. He went on to snap up other steelmakers, including Bethlehem Steel, that had fallen into bankruptcy during a prolonged slump in the industry. Mr. Ross, like other steel executives, complained when the U.S. abandoned the tariff a little more than year later after the World Trade Organization ruled the duty was illegal.
In all, Mr. Ross spent more than $1 billion to assemble International Steel Group Inc., The Wall Street Journal reported at the time, before selling the company for $4.5 billion to the London-based Mittal family in 2004.
“As aggressive trade restrictions were implemented by Bush, ISG saw a rapid increase in the value of assets just recently acquired for very distressed valuations,” said Seth Rosenfeld, a steel industry analyst at Jefferies.
Mr. Ross served on ArcelorMittal’s board of directors until his confirmation as commerce secretary in 2017, at which point he resigned his position with the company and agreed to sell his shares.
Mr. Ross’s original foray into the steel business was welcomed by the United Steelworkers union, in the hopes that new ownership could salvage what was left of the industry in the early 2000s. Most of the steel companies that had collapsed were unionized, and union leaders considered Mr. Ross as their best hope for salvaging any jobs, industry analysts said.
“What he did that was really good is he worked out new work rules with the unions that made [the company] viable,” said steel industry analyst Charles Bradford. “That was like night and day.”
The integrated steel industry was suffering from massive pension obligations and low steel prices. Among the causes of those low prices were an excess of domestic steel production and the infiltration of cheap imports into the U.S. The latter is what Mr. Ross and Mr. Trump now hope to fight with tariffs.
The 2002 tariff produced mixed results, analysts said. U.S. steel prices skyrocketed initially, supporting Mr. Ross’s acquisition of LTV. But amid a still-weak U.S. economy and volatile conditions in the steel demand, prices later fell, a drop that Mr. Rosenfeld partially blamed on International Steel for accelerating steel production.
But Mr. Ross started to see the benefits of his steel industry consolidation in early 2004 when steel prices embarked on their best run-up in years and propelled the company through to its sale to the Mittal family.