Elizabeth Brotherton-Bunch Archive

The “phase one” trade deal between the United States and China is… probably done?

President Trump on Friday took to Twitter to announce the deal, which he called “very large” and “an amazing deal for all.” But specific details about the agreement remain unclear — and what is out about it doesn’t seem to be all that great.

But while political pundits are laser-focused on how the deal will impact things like tariff rates and agricultural purchases, evidence is mounting that China is adding “a sickening new dimension” to one of the world’s most serious human rights crises.

And although U.S. trade negotiators have strategically stayed quiet about China’s human rights abuses in an effort to get a trade deal done — and although China really does not like to talk about them — given that these abuses impact the global supply chain and overall trade flows… maybe it’s time to start talking about them?

It’s long been reported that China has placed at least 1 million Uighurs and other Muslim ethnic minorities from the Xinjiang region into concentration camps, which China says are “vocational training centers.”

But in November, The New York Times published a bombshell report that included 400+ pages of internal Chinese Communist Party documents that showcased just how orchestrated this effort is — even Chinese leader Xi Jinping is implicated. Other leaks from inside the camps provide a glimpse into life inside, describing how China uses physical and psychological torture in an attempt to rid the Uighurs and other detainees of their language, religion and culture.

Sadly, it doesn’t appear that things improve for these prisoners once they leave the camps, either. A new paper from Adrian Zenz, a senior fellow in China Studies at the Victims of Communism Memorial Foundation, finds that China is placing “limited but apparently growing numbers of detainees… into different forms of forced labor.” Zenz writes:

“19 cities and provinces from the nation’s most developed regions are pouring billions of Chinese Yuan (RMB) into the establishment of factories in minority regions. Some of them directly involve the use of internment camp labor, while others use Uyghur women who must then leave their children in educational or day care facilities in order to engage in full time factory labor. Another aspect of Beijing’s labor schemes in the region involve the essentially mandatory relocation of large numbers of minority workers from Xinjiang to participating companies in eastern China.

“Soon, many or most products made in China that rely at least in part on low-skilled, labor-intensive manufacturing, may contain elements of involuntary ethnic minority labor from Xinjiang.”

Zenz’s entire paper is worth a read, as it makes clear the extent to which China is using forced labor in many of its factories. But Zenz isn’t the first to highlight this problem — there long has been evidence that China is using forced labor to make many of the products that line our store shelves, particularly in textiles.

The New York Times reported on these forced labor factories about a year ago, and around that time the Associated Press even connected one of the factories to a U.S. sportswear supplier. Companies from Kraft Heinz and Coca-Cola to Adidas and Gap also run supply chains through Xinjiang, meaning that it is plausible, if not certain, that at least some of their products have been made in these factories.  

We’ve been so lost in the hustle and bustle of the holiday season that we didn’t get a chance to talk about an important bipartisan bill introduced last month that aims to improve a key piece of America’s infrastructure — and create good-paying jobs, too.

Reps. Cheri Bustos (D-Ill.) and David McKinley (R-W. Va.) put forth the “Buy America for Drinking Water Extension Act” on Nov. 20. The legislation would permanently ensure that all iron and steel products used for projects in the Drinking Water State Revolving Fund are “made entirely in the United States.”

The revolving fund is a federal-state partnership that is used to finance projects to improve drinking water systems nationwide. Between 1997 and 2018, the fund has given more than $38.2 billion in low-interest loans to more than 14,500 projects, helping provide safe drinking water to millions of Americans.

Still, more needs to be done. Like most of America’s infrastructure, our nation’s drinking water infrastructure is in terrible shape. The American Society of Civil Engineers gave it a “D” rating in 2017, noting that the 1 million miles of pipes that deliver water to our homes in businesses were laid in the early-to-mid 20th century.

Given that these pipes have a lifespan of 75 to 100 years, it’s time to get to work modernizing these systems. And when we do, it’s important to also make sure our tax dollars are reinvested back into our communities, creating jobs and boosting the local economy, which is the goal of the new legislation.

Although they might at first seem like separate issues, jobs and infrastructure are closely linked. It’s no secret, after all, that the places that were hit hardest by manufacturing job loss and industrial flight in the late 20th century also watched their infrastructure crumble.

Perhaps the most famous example of this is Flint, Michigan.

Sens. Tammy Baldwin (D-Wis.), Shelley Moore Capito (R-W. Va.), Debbie Stabenow (D-Mich.) and Bill Cassidy (R-La.) introduced a new bill on Tuesday to “crack down on unfair trade cheating from nonmarket economies like China.”

O.K., we know: We need to be more specific here.

The Senators want to give the Commerce Department more power to hold China and other countries accountable when they evade anti-dumping (AD) and countervailing duties (CVD).

For those unfamiliar with this area of U.S. trade law, the United States issues AD/CVD duties when imported products are found to be sold below market value or to have received significant government subsidies when being produced. The idea is to level the playing field a bit for American workers and companies, who operate in a free and open market.

As the Senators note, AD/CVD rules are pretty common, and most countries follow them without issue. But nonmarket economies — especially China — work overtime to dodge these duties, engaging in “a sophisticated and government-backed effort to avoid the duties required.”

For example, China “alters their products slightly to get around the rules, violating the spirit of the law, if not the letter.” It isn’t individual Chinese companies doing this, remember: China uses “its vast government resources” to ensure these firms are able to evade U.S. trade laws and avoid the duties.

As Congress continues to work on legislation to ban China’s government-owned, controlled or subsidized companies from receiving U.S. tax money to build rail cars and buses, local lawmakers are taking on the issue in their own states.

The latest instance is in New York, where state Assemblymember Michael Cusick (D) is teaming up with state Sen. Diane Savino (D) on a bill to prevent foreign state-owned enterprises, including the China Railway Rolling Stock Corporation (CRRC), from using New York tax money on mass transportation projects.

Like federal lawmakers who have championed this issue, Cusick and Savino say they are worried about the security threats posed by allowing a firm with direct ties to the Chinese state apparatus to build critical infrastructure systems.

They point to recent testimony from former Department of Homeland Security Secretaries Michael Chertoff, Janet Napolitano and Jeh Johnson, who all specifically mentioned critical infrastructure when discussing cyber security threats at a Senate Homeland Security and Governmental Affairs committee field hearing in New York.

“There is wide consensus that allowing CRRC and other state-owned enterprises to have open access to our critical rail infrastructure and mass transportation systems is ill-advised,” Cusick said in a statement. “These contracts create major cybersecurity vulnerabilities in the U.S. The goal should be risk avoidance, not mitigation.”

There’s little doubt about China’s intentions with CRRC.

New research from Radarlock examined the company’s deep ties to China’s government, communist party and military, concluding that CRRC is a key part of China’s plan to dominate global industry. But it’s more than that – CRRC also obtains technology for potentially nefarious purposes, handing everything it gathers from its work abroad to the Chinese state and military.

Cusick and Savino say they are also worried about CRRC’s economic impact, noting that CRRC has nabbed contracts in major cities like Chicago and Los Angeles by “drastically underbidding other railcar manufacturers and using non-market tactics.”

The issue is of critical importance in the Empire State because New York City is looking to upgrade its iconic subway system. CRRC won a 2018 Metropolitan Transit Authority (MTA) contest to design new subway cars – a development that quickly drew the ire of Democratic Senate Leader Sen. Chuck Schumer, who hails from New York.

We cover a lot of ground here at the Alliance for American Manufacturing — Trade! Infrastructure! Tom Cruise! — but there’s nothing that gets us more excited than learning about an American-made product. Whether it’s a small piece of jewelry or a big piece of steel, we love highlighting the amazing workers and companies who manufacture their products in the United States.

After all, a lot of hard work — and often extra expense — goes into that “Made in USA” label. U.S. companies and workers must take care to ensure that “all or virtually all” of their products are made in the United States.

When something is labeled as “Made in USA,” many consumers recognize the effort that is behind it, along with the millions of jobs that American-made products support. The label can be a deciding factor when someone is deciding on what product to buy.

Made in USA means something.

And while nothing gets us more excited than a Made in USA product, nothing gets us more fired up than when a company knowingly mislabels its product as Made in USA. What’s worse is that these cheaters have been getting away with it.

It happens more than you think. In 2018, the Federal Trade Commission (FTC) caught some pretty brazen Made in USA cheats:

• One company sold military-themed backpacks – including on military bases! – with an “American-made” label.  The FTC found that the vast majority of that company’s products were made in China or Mexico.
• Another company made hockey pucks, and even positioned itself as “the all-American alternative to imported pucks.” All of the company’s pucks were imported from China.
• A direct-to-consumer mattress firm advertised its mattresses as assembled in the United States. The mattresses were made in China.

But in all three of these blatant cases of Made in USA cheating, the FTC politely asked these bad actors to stop this deceitful behavior.

The cheaters paid zero fines — they kept every penny they made deliberately deceiving consumers. No notices to consumers were issued. The companies didn’t even have to admit any wrongdoing!

What’s the point in even having a strong “Made in USA” standard if it isn’t enforced?

The International Brotherhood of Teamsters weighed in on the National Defense Authorization Act (NDAA) last week, sending the chairpersons and ranking members of the Senate and House Armed Services Committees a letter outlining their priorities for the legislation.

First thing on the list? Make sure that the final legislation includes language from the Senate version of the bill that would prohibit “the use of tax dollars from supporting Chinese rail car and bus companies.” Here’s General President James P. Hoffa with more:

“As the proud representatives of American workers who both manufacture and operate thousands of American-made buses, we believe that American companies must be allowed to compete on an even playing field, free from Chinese interference into our transit system and manufacturing base.”

The Teamsters’ support for banning both rail cars and buses is significant. The Senate’s version of the NDAA included language prohibiting China’s state-owned, controlled or subsidized companies from receiving taxpayer dollars to build rail cars and buses, but the House version of the bill only applies to rail cars.

If Congress moves forth with the House version, it would be a huge oversight, to say the least. As we’ve discussed in this space before, there’s widespread bipartisan economic and national security concern about China’s role in building both.

First, there’s the threat to 750 companies and 90,000 jobs up and down the transportation supply chain, as China is aiming to dominate rail car and bus manufacturing via its “Made in China 2025” plan. China heavily subsidizes its state-owned and controlled companies, allowing them to severely underbid on government contracts to build these systems. The point isn’t to make money — China’s ultimate goal is to put competitors out of business and monopolize the global industry.

If you don’t think that’s realistic, just look at what has happened to the pharmaceutical industry.

“When you can subsidize, when you can wholly own an enterprise like China does, you can create a wholly unlevel playing field,” Sen. Tammy Baldwin (D-Wis.) recently told the New York Times. “We’re used to that unlevel playing field existing between the U.S. and China, but now it’s happening in our own backyard.”

A little over a year ago, AAM President Scott Paul chatted with health care expert Rosemary Gibson for an episode of The Manufacturing Report podcast. Gibson had just co-authored a new book examining an overlooked part of America’s trade relationship with China.

The book’s title says it all. In “China Rx: Exposing the Risks of America’s Dependence on China for Medicine,” Gibson and co-author Janardan Prasad Singh outline how China now dominates pharmaceutical manufacturing — and why that is such a big problem for the United States.

Along with making a significant amount of medication, China also has a virtual monopoly on many of the essential ingredients that go into the pharmaceuticals that Americans depend on, including everything from over-the-counter vitamins to cancer meds to almost every antibiotic and blood pressure medication.

China’s dominance of the pharmaceutical supply chain means it has the power to cut off access to many of the medications Americans need to, um, live.

Think tariffs on cotton sweaters and bed linens are bad? Think about what would happen If China decided to cut off our medicine.

Pharmacy shelves would sit empty. Hospitals would close. People would die.

“Children and adults with cancer will suffer without vital medicines,” Gibson recently told the U.S.-China Economic and Security Review Commission. “For people on kidney dialysis, treatment would cease, a veritable death sentence.”

It’s all very scary stuff. Keep you awake at night kind of stuff.

An interesting little story from Europe popped up in our news alerts on Tuesday morning.

It seems that Vossloh, a German rail technology company, is divesting its locomotives business so it can focus on rail infrastructure.

Normally, we here at the Alliance for American Manufacturing wouldn’t pay much attention to the business dealings of a German manufacturer like Vossloh. But what caught our eye was who ended up buying Vossloh’s locomotives unit: China Railway Rolling Stock Corporation Ltd (CRRC).

Nikkei Asian Review reports:

“CRRC, the Chinese state company that is the world’s largest train maker, is set to gain a key foothold in Europe by acquiring its first factory on the continent… Vossloh announced Monday that it would sell a locomotive factory it opened last year to CRRC Zhuzhou Locomotive, a subsidiary of Hong Kong-listed CRRC.”

If you aren't familar with CRRC, it is a massive Chinese government-owned conglomerate with deep ties to the Chinese communist party. CRRC is a key player in the government’s “Made in China 2025” initiative, in which China is aiming to dominate sectors of the global industrial economy, including rail manufacturing.

We’ve been sounding the alarm about the risks that come with allowing Chinese government-owned or controlled companies to build U.S. transit systems like rail cars and buses (and with U.S. taxpayer dollars, natch). 

But hey, don’t take it from us. How about you take the word of four Admirals? And 10 Generals? Oh, and also a former Secretary of the Navy?

Fifteen military leaders wrote to the House and Senate armed services committees this week to urge Members to back legislation to ban companies owned or controlled by the Chinese government from building taxpayer-funded rail cars or buses.

The leaders are particularly concerned about China’s growing dominance in the electric vehicle (EV) sector, writing that China “seeks to gain strategic advantages… by providing aggressive government subsidies to Chinese corporations to lower prices to win business, undermining principles of fair competition and competitive markets.”

They continue:

“If China captures the EV market, the United States’ opportunity to enhance energy security by divorcing itself from an unstable global market merely swaps our reliance on one volatile oil market for a dependence on Beijing for our EVs. Moreover, the infiltration of Chinese technology into the EV sector raises substantial cybersecurity risks that may be difficult to assess and address.”

There’s growing concern on Capitol Hill about China’s role in building U.S. transit, and legislation included in the Defense authorization bill (NDAA) passed by both the Senate and the House before the August recess aims to tackle it.

Congress is out of session for the August recess, which means that the nation’s legislative business is on hold for a few weeks.

But Members have a packed agenda waiting for them when they return in the fall, including finalizing the National Defense Authorization Act (NDAA). It’s a massive bill that authorizes the Defense Department, and included in this year’s version is language that could potentially impact hundreds of thousands of good-paying jobs and our national security.

No pressure, Congress.

As we’ve outlined before, there are major security and economic concerns about China’s role in building U.S. transit. The Senate moved to address these threats when it passed its version of the NDAA by including language to ban Chinese government-owned or controlled companies from using U.S. taxpayer dollars to build U.S. rail cars and buses.

When the House passed its version, however, the ban only applied to rail.

The reason? Folks like House Minority Leader Kevin McCarthy (R-Calif.) support bus maker Build Your Dreams (BYD) – a company that maintains strong ties to China’s government (and has ambitious plans to dominate the global auto market, which threatens hundreds of thousandsU.S. jobs).

Now the legislation is headed to conference, and negotiators from the Senate and the House will determine whether to move forward with the Senate version or the House version. Or, they could very well scrap the language all together in order to ensure passage of the NDAA.

That’s what happened earlier this year, in fact, when similar language was included as part of the fiscal 2019 omnibus spending bill (a.k.a., the legislation that avoided another government shutdown). Because of the complaints of McCarthy, the provision was scrapped and not included as part of the final legislation.

It’s important that negotiators get it right this time.

The United States and China have been at odds over trade for quite some time now, but things usually have stayed polite. Tariffs were issued, threats were leveled, but everybody still made a big point to project calm (well, relative to this administration, anyway). President Trump even took pains to talk about how he and President Xi Jinping were totally good friends!

Well, that’s over.

After U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin returned from recent China trade talks empty-handed, Trump pushed things up a level, saying he would place tariffs on all Chinese imports. 

Then after China responded by allowing its currency to drop in value, the Treasury Department said it is naming China a currency manipulator.

If you believe some of the pundits out there, this is really bad — nay, out of control! And it’s pretty serious — the United States hardly ever names a country a currency manipulator. The last time was… um, China, in the early 1990s.

But you might be wondering… what is currency manipulation? What does it mean?

Let’s break it down.

Well, we made it.

The second night of the second Democratic presidential debates is in the books, and some key manufacturing issues did make it into the spotlight on Wednesday night in Detroit, including trade.

Although this go-around lacked some of the passion featured on the first night — Sens. Bernie Sanders (Vt.) and Elizabeth Warren (Mass.) are the two candidates who have made trade one of their top issues, after all — nearly everybody did mention it at some point. 

But it was frontrunner Joe Biden who got the most attention. The former vice president and longtime senator has the most substantial policy record of anybody in the race, and his rivals on Wednesday didn't hesitate to attack him on it on all fronts, including trade. And Biden made news, announcing he would "renegotiate" the Trans-Pacific Partnership (TPP) trade deal, which President Trump pulled the United States out of on his first day in office. You'll recall, of course, that the TPP was negotiated under the Obama administration — which was when Biden served as vice president. So, Biden's flip-flop is a big f—ing deal.

Read on for more on what Biden said about trade and other manufacturing issues, as well as the remarks from all the other candidates who took part in Wednesday's debate.

Sen. Michael Bennet (Colo.): Moderator Dana Bash asked the Centennial State senator about technology's role in job displacement, and Bennet responded that the real issue is "how are we going to remain competitive? It's not just about trade... it's about whether we're going to invest in this country anymore." He then argued against the recent tax cuts and trillions of dollars spent in the Middle East, noting that "for all the money I've just described, we could have fixed every road and bridge in this country. We could have fixed every airport... We could have fixed not just Flint, but every water system in this country."

Former Vice President Joe Biden: On trade, Biden's record is mixed. As former President Barack Obama's vice president, he was a vocal supporter of the Trans-Pacific Partnership (TPP), but on Wednesday he said the deal must be renegotiated. And in 1993, he voted for the passage of NAFTA. But Wednesday night, Biden dodged a question about the Trump administration's efforts toward a NAFTA renegotiation, and backtracked on his earlier advocacy for the TPP. That flip-flopping aside, it is clear Biden thinks the United States should remain open to trade.

We have a few ideas for what moderators should ask the candidates during this week's debates.

The House Select Committee on the Climate Crisis – a special Congressional panel established in 2019 with the mandate of exploring ways to address climate change – held a hearing on Tuesday that caught our eye.

Now, astute readers of this blog know that the Alliance for American Manufacturing is supportive of efforts to clean up our environment.

We think manufacturers can and should do their part to lower greenhouse gas emissions, and thankfully many already are stepping up to the plate. And we’ve also sounded the alarm about the link between trade and climate change, pointing out that when we depend countries like China for products big and small, we essentially are importing our pollution.

But anyway, back to the hearing, which examined how heavy-duty public transportation impacts the environment.

We were excited to see that Ryan Popple, the president and CEO of zero-emission battery-electric bus maker Proterra, Inc., was among the panelists. Founded in Colorado in 2004, Proterra is now headquartered in Silicon Valley and manufactures its buses at factories in the City of Industry, Calif., and Greenville, S.C. Proterra employs more than 500 people, and has made buses for communities in 36 states, the District of Columbia and even two Canadian provinces.

Proterra is an example of an American manufacturer that is tackling a problem head-on, working to reduce carbon emissions while also supporting job growth and local economic development. But that’s not what got our attention.

What did were the opening remarks from ranking member Garrett Graves. The Louisiana Republican echoed Chair Kathy Castor (D-Fla.), who said America “can lead the world with well-paying jobs as we transition to clean energy.”

And Graves also pointed out what we shouldn’t be doing:

“We had hearings in the transportation committee, where I also serve, where BYD, a Chinese bus manufacturer, was coming in -- and it appears to be a state-owned enterprise -- coming in and knocking out domestic bus manufacturers, and being subsidized by the Chinese government. Coming in and assembling buses in California, in some of our own communities, only to undercut price, knock out domestic production of those same types of vehicles, therefore giving China an advantage.”

AAM President Scott Paul testified at that hearing, and he noted that BYD’s business model is to assemble its buses in the United States, but heavily rely on imported parts and components. (Compare that to Proterra, which sources more than 75 percent of its materials in the United States, supporting jobs up and down the transportation supply chain.)

BYD now has set its sights on dominating world auto sales by 2025, which as Scott Paul noted “would threaten over 5,600 parts suppliers spread across the nation, employing 871,000 workers, the very heart of American Manufacturing.”

A big step in the right direction.

The House of Representatives on Friday passed the annual spending bill for the Defense Department, and the legislation included language to block federal transit dollars from being spent on electric rail cars made by Chinese state-owned companies.

The provision included in the National Defense Authorization Act (NDAA) passed by the House prohibits federal tax dollars from being used to award a contract or subcontract for the procurement of rail cars to be used in public transportation by state-owned or controlled companies from non-market economies like China.  

Although the NDAA passed on party lines, this specific legislation enjoyed bipartisan support, as it was originally sponsored by Reps. Harley Rouda (D-Calif.), Rick Crawford (R-Ark.), Scott Perry (R-Pa.), Kay Granger (R-Texas), Tim Ryan (D-Ohio), Eleanor Holmes Norton (D-D.C.), Randy Weber (R-Texas) and John Garamendi (D-Calif.).

The NDAA now heads to conference with the Senate, which previously passed its version of the defense authorization bill that included a similar provision that applied to both rail and buses. Sens. John Cornyn (R-Texas), Tammy Baldwin (D-Wis.), Mike Crapo (R-Idaho) and Sherrod Brown (D-Ohio) served as the original sponsors of the Transit Infrastructure Vehicle Security Act in that chamber.

Here at the Alliance for American Manufacturing, we encourage lawmakers to put forth a final NDAA conference report that includes the Senate version of this provision, as it applies to both types of public transit.

President Trump is back from his big weekend trip to the G-20 summit, where he met with world leaders and even made a quick stop in North Korea!

There’s no shortage of headlines from Trump’s trip, and there’s certainly a lot to unpack. But some Members of Congress are homing in on one in particular: Trump’s announcement that he will loosen restrictions on U.S. companies doing business with Chinese technology giant Huawei.

Schumer and Rubio — not a couple of guys you expect hang out much — aren’t alone in their criticism. A growing list of Republicans are speaking out against Trump’s decision, as are 2020 Democratic presidential contenders like Tim Ryan.

Political pundits don’t seem all that impressed, either. Over at Bloomberg, technology columnist Tim Culpan wrote that “as far as deals go, this is set to be one of Trump’s worst.”

Oof. Apparently feeling the heat, Trump administration officials are already scrambling to downplay Trump’s decision, with White House economic adviser Larry Kudlow saying that the easing of restrictions on Huawei will be for “general merchandise, not national security sensitive” products like chips and software.

There’s a lot of political posturing happening here, and if you aren’t completely tuned into this ongoing saga, you might be justifiably lost. Let’s break things down.

If you’ve visited the Internet sometime over the past two-and-a-half years, you almost certainly have come across a diner story.

You know the one. A reporter from a big fancy news outlet with its headquarters in New York City or D.C. flies out to a working-class town in Ohio or Michigan or Pennsylvania or maybe even Wisconsin and stops at the local diner — or maybe a sports bar. There, the reporter talks to people over pancakes and coffee or chicken wings and beer about their political opinions and why they think Donald Trump got elected president, then files a story and immediately flies home.

There were so many of these stories in recent years — full disclosure: we shared them and even are featured in some — that predictably there was pushback. One of the criticisms is that these pieces aim to figure out the white working-class voter but leave out the voices of people of color who also live in these places.

While some folks have taken pains to capture diverse voices — Chris Arnade comes to mind — there are examples where this criticism is valid. Slate was among the outlets that critiqued The New York Times for visiting Youngstown, Ohio, but failing to capture the voices of the majority-minority city, which is 43 percent black.

And Slate went a step further, sending reporter Henry Grabar to Buckeye State to get the perspective of “the people in Youngstown, Ohio that the national media usually ignores.” Grabar’s report highlights the unique struggles that the black community in Youngstown has faced over the past several decades, writing that whatever “went wrong for the white working class here went even worse for their black counterparts.”

It’s not just Youngstown. Back in 2016, Gerald D. Taylor — himself a Youngstown native! — highlighted some of these issues in the report Unmade in America: Industrial Flight and the Decline of Black Communities. As Taylor notes, manufacturing in the mid-20th century allowed many black families the opportunity to begin to build a nest egg, own their own homes and move into the middle class.

Earlier this month was World Environment Day, a global United Nations event defined as the “’people’s day’ for doing something to take care of the Earth.”

There’s a host nation each year for the event — this year it’s China, LOL — but also Dave Matthews is a celebrity ambassador, so it’s pretty legit.

In any case, the Alliance for American Manufacturing has long held that American companies and workers have a role to play in reducing carbon emissions and improving the environment. Many already are leading the way, from individual companies like Aardvark Straws, which is helping Americans ditch harmful plastic straws, to the 1,200 U.S. factories and 288,000 American workers who are building clean, fuel-efficient vehicles.

Then there’s steel company ArcelorMittal, which recently unveiled its Climate Action Report, the company’s game plan for cutting its global emissions in line with targets adopted by world leaders in the 2015 Paris Agreement.

ArcelorMittal is the world’s largest producer of steel, and it has an extensive presence in the United States, employing more than 18,000 people at 27 operations in 14 states and Washington, D.C. As such, it’s a leader for the entire steel industry, which accounts for 7 percentof total global emissions worldwide (although it’s worth pointing out that China — which has a steel overcapacity problem to begin with — is driving quite a lot of those emissions).  

But I digress.

Two big manufacturing stories we’ve been following closely over the past few months are converging.

First, there’s the U.S.-China trade negotiations, which are… so not happening right now. President Trump, emboldened from his recent tariff spat with Mexico, is playing hardball with China, and the Chinese are not backing down, either.

That means that businesses are looking at long-term strategies on how best to survive a trade war between the two nations before things really get out of hand.

One of those companies is Foxconn, which makes a ton of tech but is perhaps best known for manufacturing iPhones in China. Most of the factories that produce the iPhone and its various parts are in China, and Foxconn employs 350,000 people to make them at a massive factory complex in Zhengzhou called “iPhone City.”

Working conditions there are just great and people are very happy.

But I digress. If Trump does indeed follow through on his current plan to place a 25 percent tariff on Chinese imports, the iPhone and other Apple gadgets would take a hit. As The Verge noted, one-third of Apple’s iPhone revenue comes from products imported to the United States from China, so it’s a big deal for the California-based company’s bottom line.

Apple would have to decide whether to pass the cost increase onto consumers, which could raise the price of the already expensive iPhone by up to 16 percent, according to Bloomberg. Demand for the iPhone could then decrease by up to 40 percent. Either way, Apple is in a bad place.

So Foxconn — which relies on Apple for about half of its revenue — is now looking at ways to make the iPhone outside of China and avoid the tariffs. Foxconn executives already have made a big deal about how it is “totally capable of dealing with Apple’s needs to move production lines,” possibly to plants in Brazil, Mexico, Vietnam or... Wisconsin? 

We've written fairly extensively about the threat that Chinese state-owned companies like the China Railway Rolling Stock Corporation (CRRC) and Build Your Dreams (BYD) pose to both good-paying jobs and our national security. AAM President Scott Paul even testified about it at a Congressional hearing a few weeks back.

Now you have a chance to weigh in!

In case you need to catch up, here's the deal. CRRC and BYD are owned and controlled by the Chinese government, which is seeking to systematically drive competitors out of the market and create a monopoly in both the rail (CRRC) and bus (BYD) production markets. CRRC has severely underbid competitors for contracts to build railcars in cities like Chicago, Los Angeles and Philadelphia, while BYD has nabbed contracts in Los Angeles and Albuquerque. 

China's goal isn't to make money, as companies that operate in a free and open market would. Rather, it wants to completely take over the entire production of America's rail and bus systems as part of its "Made in China 2025" plan. This, of course, creates a number of national security risks — from potential spying on passengers to hacking into transit systems — as well as big economic worries, as there are currently 90,000 good-paying jobs in the U.S. that depend on transit production.

Three weeks ago, Speaker Nancy Pelosi (D-Calif.) and Senate Democratic Leader Chuck Schumer (N.Y.) traveled to the White House to talk infrastructure with President Trump. It went surprisingly well, and the trio met again on Wednesday to hash out ways to fund a $2 trillion bipartisan plan. Yay!

So... Trump angrily stormed out of the meeting on Wednesday, saying he wouldn't work with Democrats until they “get these phony investigations over with.”

And Pelosi responded that she’s now “praying” for him.  

LOL INFRASTRUCTURE WEEK AMIRITE?!?

Here’s how it went down:

Welp.

Trump is clearly playing politics, hitting back at Democrats for their ongoing investigations into him and his administration (and growing momentum to impeach him).

But there might be another reason why Trump decided to blow up the infrastructure meeting — he doesn’t want to have an internal fight with his own party. After all, Congressional Republicans have balked at the $2 trillion price tag of the plan, and Trump’s own chief of staff told people that it would be difficult to pass “any infrastructure bill in this environment, let alone a $2 trillion one.”

It’s been just over a year since the Trump administration instituted “Section 232” trade action to address surging steel imports. President Trump’s decision to institute steel tariffs has proven to be one of the more controversial decisions of his time in office — which is rather interesting, considering this is a president who seems to thrive on controversy — but nonetheless people seem to have a lot of very important thoughts about it.

But what is often missing from the typical Acela Corridor rhetoric is actual on-the-ground information about what is happening in the steel communities who saw the direct effects of the trade action. With that in mind, we decided to visit some of these places and find out what is happening for ourselves.

Alliance for American Manufacturing President Scott Paul recently traveled to Coatesville, Pa., and Granite City, Ill., two steel towns that were devastated by the steel imports crisis.

Coatesville is home to the oldest continuously operating steel mill in the country — and is a key supplier of the special steel used by the military and to build critical infrastructure — but it came close to shutting down until the steel tariffs helped stabilize the industry. The steel mill in Granite City did shut down in 2015, but the trade action led to the restart of the mill’s two blast furnaces in 2018.

We’re sharing some of the findings from the two trips in a new special section on our website. You can also take a deeper dive on The Manufacturing Report podcast, which is available on iTunes and over on Soundcloud — here’s the episode on Coatesville, and here is Scott’s report from Granite City.

President Trump took a break from his normal Twitter routine on Wednesday afternoon to break a piece of honest-to-goodness news:

Trump is referring to the General Motors Lordstown plant in Ohio, which is one of five North American plants that General Motors announced in November would be shut down, eliminating thousands of jobs.

The Lordstown plant officially closed in March, leading to 1,400 layoffs. Although some of the Lordstown workers have landed at other GM plants, others are still looking for work.

The Lordstown closure was devastating for Ohio’s Mahoning Valley, which had depended on the factory as a pillar of its economy since it opened in 1966. For his part, Trump took the news of the Lordstown closure pretty personally. After all, he visited nearby Youngstown during the 2016 campaign and famously declared, “Those jobs have left Ohio — they’re all coming back. Don’t move, don’t sell your house.”

When Trump tweeted out Wednesday afternoon that GM had sold the Lordstown factory — and to Workhorse, a company that wants to use it to make electric trucks! — it seemed like great news.

But once you start looking at the details, it’s not so clear any of this is going to pan out.

U.S. Steel was the world’s first billion dollar corporation — and now the company is investing more than $1 billion to transform its hometown steelmaking complex into what CEO Dave Burritt says will be “the most innovative steel mill in the United States of America.”

Located just outside Pittsburgh, Mon Valley Works is an integrated operation of several different facilities, and U.S. Steel is aiming to increase its efficiency while also significantly reducing its emissions. The upgrades will allow Mon Valley Works to churn out the type of high-strength, lightweight-yet-flexible steel sought after by the auto, appliance and construction industries.

A new cogeneration facility will be built at the Clairton Plant in Clairton, Pa., which will allow the company to convert a portion of coke oven gas into electricity to power operations throughout the entire Mon Valley Works. At the Edgar Thomson Plant in nearby Braddock, the company will build a new sustainable endless casting and rolling facility, the first of its kind in the United States and one of only a handful in the world.

The 3,000 current employees at Mon Valley Works will have the chance to receive training to operate the upgraded facility, and U.S. Steel plans to “partner with educators in our community” to train the next generation of steelworkers for advanced manufacturing jobs. Meanwhile, the company expects to see a big decrease in its carbon footprint because of the improvements, including a 60 percent drop in particulate matter, a 50 percent decrease of sulfur dioxide and an 80 percent drop of nitrogen oxides.

We’ve spent a good deal of time on the blog the past several weeks talking about Lordstown, the infamous General Motors plant that shut down in March, leading to 1,400 layoffs.

Now it looks like Lordstown is becoming an issue in the 2020 presidential campaign.

Democratic candidate Bernie Sanders — who is considered one of the party’s frontrunners for the nomination, at least as much as there can be a frontrunner at this point — visited Lordstownlast week. And over the weekend, the Vermont senator dropped a new digital campaign ad about the Lordstown closure in which he takes direct aim at President Trump.

The Sanders ad, titled “Lordstown Tough,” features Chuckie Denison, a third-generation GM worker who worked at Lordstown and other GM facilities. Denison is backing Sanders in the race — a given, since he’s in an ad for the guy — but Denison spends a good chunk of the ad talking about Trump.

“Trump lied to Ohio. … He came to this area and told people, ‘Do not sell your homes, I’m bringing the jobs back.’ And weeks after that, is when they announced the plant closing,” Denison says.*

Denison continues: “He came here and lied to these people. I didn’t buy it, but many people did because they were hanging on to hope. They were hoping that he would do something, but he did the opposite.”

The ad also features clips of Sanders, who calls out Trump for granting GM federal contracts despite the fact that the company is shipping production overseas.

We’ve been closely monitoring trade talks between the United States and China, and we’ve gone on record to note that there are a couple of ways things could go. The two countries will either reach a historic deal that requires China to play by the rules of global competition — or the agreement will be a dud, making a few superficial changes but mostly maintaining the status quo.

Well, score one for the status quo.

Reuters reports that “U.S. negotiators have tempered demands that China curb industrial subsidies as a condition for a trade deal after strong resistance from Beijing.”

Instead, negotiators are focusing on issues they see as more achievable, including ending forced technology transfers, strengthening protection of intellectual property and opening up China’s markets.

Look, addressing technology transfers and intellectual property is vital, and U.S. negotiators are right to focus on them. Ditto for further opening up China’s market.

But by abandoning the issue of industrial subsidies in these talks, the United States is giving a green light to China to continue to cheat the global trading system and put countries and companies that play by the rules at a disadvantage.

Case in point: Steel.

President Trump put a 25% tariff on steel imports in April 2018 in response to surging foreign imports. Now, you’ve probably heard about those "Section 232" tariffs — they’ve garnered a lot of criticism from the Acela Corridor set — but what is often missing from the conversation is that despite Trump’s bluster, there was a very legitimate reason why he issued those tariffs.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin arrived in China on Thursday for continued trade talks.

There’s a lot the two nations are expected to discuss this time around – intellectual property, state-owned enterprises, forced technology transfers – and while it remains unclear whether any meaningful progress will be made, it does appear the two nations are inching toward a deal.

Meanwhile, two lawmakers are turning their attention to an issue that hasn’t been getting a lot of press, but could have big implications for U.S. job growth and competitiveness when a deal is finally reached.

Rep. John Garamendi (D-Calif.) and Sen. Roger Wicker (R-Miss.) wrote to Lighthizer, Mnuchin and Commerce Secretary Wilbur Ross this week asking the three to ensure that U.S.-flagged and crewed vessels “play a key role” in the transportation of liquefied natural gas (LNG) exports to China.

There’s growing speculation that China will agree to purchase $18 billion worth of natural gas from the United States as part of the eventual U.S.-China trade agreement. While that is good news for the domestic natural gas industry, Garamendi and Wicker also point out that unless U.S. officials step in, those LNG exports will “almost certainly be on foreign-flag vessels operated by foreign crews.”

The U.S.-flag international fleet has declined by nearly 60 percent since 1991 to just 80 vessels. Considering the fleet’s importance to U.S. national and economic security, this certainly does seem like something that needs to be addressed.

It’s been about a year since the Trump administration implemented its “Section 232” trade action, and steel industry officials told Congress on Wednesday they are seeing the positive effects — investments in facilities across the country, thousands of new jobs, raising wages, and even small business growth in local communities.

But nobody is breaking out the champagne quite yet.

“Right now, the steel industry is in what I would call recovery. Times are better than they’ve been in a long time,” said Leo Gerard, international president of the United Steelworkers. “But let me just say this: Chinese overcapacity still exists… We can’t sit idly by and think that just because things appear to be good they’re going to be good forever. We’ve got to make the recognition that the cheaters still exist.”

The labor leader’s message was echoed by steel executives who also testified at the annual Congressional Steel Caucus hearing. Officials from steel companies and associations noted that tariffs placed on steel imports have allowed the industry to finally begin to stabilize after facing an onslaught of unfairly traded imports, mainly from China.

The 232 tariffs have led to a decrease in imports and an uptick in domestic production. More than 12,000 new jobs have been announced across the steel and aluminum industries since the 232 investigation launched; $18.2 billion in investments also have been announced. Recent bargaining agreements between the Steelworkers union and several companies have led to raises and even bonuses for tens of thousands of workers.

U.S. Steel, for example, is investing at in several facilities across the country. In Granite City, Ill., the company restarted two blast furnaces that had sat idle since 2015, creating 800 jobs. In Lone Star, Texas, 140 new workers will soon be making products at a tubular mill that shut down in 2016. In Fairfield, Ala., the company is resuming construction of an electric arc furnace, a project placed on hold in 2015. About 600 workers will help build it, and 150 new employees will run it.

It seems like a thousand news cycles ago now, but President Trump unveiled his proposed 2020 budget on Monday.

The $4.75 trillion budget includes major cuts to federal spending for domestic programs while increasing funding for defense and border security. Lots of people are fired up about it, but it’s important to keep in mind that Congress has the ultimate say over the budget — and lawmakers have rejected many of Trump’s budget requests in the past.

Still, the budget does offer a glimpse into the Trump administration’s priorities for the upcoming year, and as such we spent some time digging through the document for items that may impact manufacturing. One thing in particular caught our eye: Trump’s proposal to severely cut — and eventually phase out — federal funding for the Manufacturing Extension Partnership (MEP) program.

This is a terrible idea. Just terrible.

MEP runs a network of centers in all 50 states and Puerto Rico designed to help small and medium-sized manufacturers improve their businesses, including through things like product development, worker training programs, and business continuity planning.

MEP punches above its weight when it comes to achieving results. The $128 million invested in MEP during fiscal year 2017 generated almost $1.9 billion in returns to the federal treasury, according to a study by the Upjohn Institute.

Meanwhile, MEP has helped create 985,117 jobs since its founding in 1988. That’s nearly a million jobs!

That’s not all, either. When MEP celebrated its 30^th anniversary last year, it noted it has worked with 94,033 manufacturers, helping generate $111.3 billion in sales and $18.8 billion in cost savings for its clients.

That is why it strikes us as foolhardy for the Trump administration to try to gut the program. Trump proposes cutting current funding levels by $125 million for fiscal 2019 — which would leave just $5 million left for the program. Eventually, the federal government would cut off all funding, according to the proposal.

You might remember that back in 2015, the television news program 60 Minutes aired an investigative report finding that national chain Lumber Liquidators was selling Made in China laminate flooring containing dangerously high levels of formaldehyde, a substance known to cause cancer.

The segment – if you feel like getting angry today, just watch it below –  prompted the government to investigate, and a class action lawsuit was filed on behalf of the 760,000 customers who had purchased the poisonous flooring.

In 2018, Lumber Liquidators was ordered to pay a $36 million settlement as a result of the class action lawsuit. And on Tuesday, the company agreed to pay a $33 million penalty to settle federal charges that it misled its investors about the flooring. Reuters reports:

The Justice Department settlement includes a deferred prosecution agreement, under which the government agreed not to prosecute Lumber Liquidators for securities fraud so long as the company upgrades oversight and cooperates with its ongoing probe for three years. … The amount the company will pay represents Lumber Liquidator’s net profits from the sale of 100 percent of its Chinese laminate from January through May 2015, U.S Attorney’s office said.

The company also has completely replaced its senior executive team, and “installed experienced executives who have displayed a commitment to building an ethical corporate culture,” according to U.S. Attorney G. Zachary Terwilliger.

As 60 Minutes reported, the Chinese-made laminate flooring sold by Lumber Liquidators contained astonishingly high levels of formaldehyde. When a team of investigators featured in the report tested 150 boxes of the flooring, they found every single piece of it exceeded California emissions standards, some 20 times above acceptable levels. A 2016 federal investigation confirmed much of those findings.