Business

Raimondo Heads to China to Both Promote Trade, and Restrict It

Published

1 year ago

August 26, 2023

Raimondo Heads to China to Both Promote Trade, and Restrict It

Gina Raimondo, the secretary of commerce, is heading to China on Saturday with two seemingly contradictory responsibilities: a mandate to strengthen U.S. business relations with Beijing while also imposing some of the toughest Chinese trade restrictions in years.

The head of the Commerce Department is traditionally the government’s biggest champion for the business community both at home and abroad, promoting the kind of extensive ties U.S. firms have with China, the world’s second-largest economy.

But U.S.-China relations have turned chillier as China has become more aggressive in flexing its economic and military might. While China remains an important economic partner, American officials have increasingly viewed the country as a security threat and have imposed a raft of new restrictions aimed at crippling Beijing’s access to technology that could be used to strengthen the Chinese military or security services.

The bulk of those restrictions — which have stoked anger and irritation from the Chinese government — have been imposed by Ms. Raimondo’s agency.

The Commerce Department has issued extensive trade restrictions on sales of chips, software and machinery to China’s semiconductor industry and is mulling an expansion of those rules that could be issued soon after Ms. Raimondo returns to Washington.

Her visit could be the biggest test yet of whether the Biden administration can pull off the balancing act of promoting economic ties with China while clamping down on some trade in the interest of national security.

Ms. Raimondo will be the fourth administration official to travel to China in recent months, following John Kerry, the president’s special envoy for climate change; Treasury Secretary Janet L. Yellen; and Secretary of State Antony J. Blinken.

Ms. Raimondo is expected to reiterate what her counterparts have told Chinese officials: that there is no contradiction between the administration’s goals for encouraging commercial engagement with China and protecting U.S. national security. They argue that the United States can maintain economic ties with China that benefit both countries and encourage peace, while also setting narrow but tough restrictions on China’s access to advanced technology in the interest of national defense.

But the approach faces skepticism in both countries. In the United States, some Republicans argue that even more innocuous business ties with China could undercut U.S. industries and leave the nation vulnerable to influence from Beijing. And in China, many view what the U.S. government describes as narrow, national-security-related actions as a poorly disguised effort to hold back the Chinese economy.

“I think the Commerce Department has tried to be very targeted,” said Samm Sacks, a senior fellow at Yale Law School’s Paul Tsai China Center. “Now, the Chinese side won’t see it that way.”

For Chinese officials, Ms. Raimondo simultaneously represents some of their best opportunities for engagement with the United States and their biggest source of frustration.

Experts say her visit presents a chance for Chinese leaders to strengthen trade relations and signal that their country is still open to international business at a moment when the Chinese economy has stumbled, foreign investment has declined and a series of raids on companies with foreign ties have set executives on edge.

But Chinese officials have also harshly criticized the technology curbs issued by her department, a condemnation they are likely to repeat in the week ahead. Officials in Beijing have also been highly critical of the new restrictions on American investment in certain high-tech Chinese industries, which the Biden administration proposed earlier this month.

At a summit in South Africa this week, a Chinese official delivered a prepared statement from Chinese leader Xi Jinping that called for the world to avoid “the abyss of a new Cold War” and blamed “some country, obsessed with maintaining its hegemony” for working to cripple emerging markets and developing countries.

In addition to export controls, Ms. Raimondo is overseeing the distribution of $50 billion to chip companies that build facilities in the United States. Any company that accepts that funding must agree not to build new factories for making advanced chips in China for at least a decade.

“The Biden administration is probing for a way to engage the Chinese in a very difficult environment,” said Myron Brilliant, a senior counselor at Dentons Global Advisors-ASG who was formerly the executive vice president of the U.S. Chamber of Commerce. “It’s a balancing act for sure, between the national security agenda they are enforcing, while also recognizing that a lot of trade between the countries doesn’t touch on national security considerations and should therefore not be restricted.”

Ms. Raimondo is set to meet with high-level Chinese officials and representatives of American businesses in Beijing and Shanghai between Monday and Wednesday. People familiar with the government’s planning say those talks may result in the creation of working groups to discuss export controls and commercial issues that arise between China and the United States.

American businesses are also hoping that the Biden administration will push for additional intellectual property protections for pharmaceutical companies, more access to the Chinese market for Visa and Mastercard and the completion of a longstanding Chinese order of Boeing airplanes, among other goals, people familiar with the talks said.

But those gains, while important for American firms, would still seem trivial compared with the mounting pressures U.S. companies can now face in China.

China’s sputtering economy and harsh lockdowns during the pandemic are giving pause to businesses considering their presence in the country. The Chinese government has also restricted companies sending data from China abroad, making it more difficult for multinationals to do business.

Chinese authorities have responded to increasing technology restrictions from the United States by barring the U.S. chip-maker Micron from sales to companies that handle critical Chinese information and by scuttling a proposed merger between Intel and an Israeli chip-maker with operations in China. And companies exporting from China still face nearly the full suite of tariffs imposed by the Trump administration, in addition to the new export controls.

The Biden administration has acknowledged the tensions in the U.S.-China relationship, saying that China poses a threat to U.S. national security but that it is still one of the country’s most integral economic partners.

“This isn’t about, you know, holding China back or denying them commodity technology,” Ms. Raimondo said of the export controls at an event at the American Enterprise Institute in July. “Certainly not about denying U.S. companies revenue. It’s about being honest about the fact that China has a military civil fusion strategy, which includes getting our most sophisticated technology and using it to advance their military. And we’re not going to allow that.”

The United States has for decades imposed export controls on the types of technology that can be sent to China, including restricting sales of satellites and other technology following Beijing’s crackdown in Tiananmen Square in 1989.

But limits on technology trade with China have increased substantially in recent years, since the Trump administration imposed restrictions on the Chinese telecom firm Huawei. In October, the Biden administration expanded the limits to all firms using advanced chips in China.

Chip firms, which earn a third or more of their global revenue through sales to China, have also pushed back, saying that the new restrictions are resulting in less money to invest in new research and innovation.In July, the chief executives of Nvidia, Qualcomm and Intel met with Ms. Raimondo in Washington to make that case.

It’s not clear how much influence, if any, their lobbying will have on the rules. Ms. Raimondo, a former venture capitalist and governor of Rhode Island, has a long reputation as a business-friendly and pragmatic political actor. But as commerce secretary, she has repeatedly argued that the United States could not compromise on issues of national security.

“We are not seeking the decoupling of our economy from that of China’s,” Ms. Raimondo said in a speech at the Massachusetts Institute of Technology in November. “We want to continue to promote trade and investment in those areas that do not undermine our interests or values.”

Business

Cleveland-Cliffs Signals a Possible New Bid for U.S. Steel

Published

4 hours ago

January 14, 2025

Press Room

Cleveland-Cliffs Signals a Possible New Bid for U.S. Steel

A possible new takeover bid for U.S. Steel emerged on Monday, teeing up more turmoil over the once-dominant company’s future after President Biden’s decision to block its acquisition by a Japanese company.

Lourenco Goncalves, the chief executive of an American competitor, Cleveland-Cliffs, said his company had “an All-American solution to save the United States Steel Corporation,” stressing that acquiring U.S. Steel was a matter of “when,” not “if.” But he offered no details of the bidding plans.

The renewed expression of interest from Cleveland-Cliffs comes less than two weeks after Mr. Biden blocked a $14 billion takeover of U.S. Steel by Nippon Steel, arguing that the sale posed a threat to national security. Cleveland-Cliffs tried to buy U.S. Steel in 2023, an offer that was rejected in favor of Nippon’s higher bid.

CNBC reported on Monday morning that Cleveland-Cliffs would seek to take over U.S. Steel and sell off its subsidiary, Big River Steel, to Nucor, another American producer. But Mr. Goncalves, at a news conference later in the day, would not confirm any partnership with Nucor on a bid.

U.S. Steel and Nucor did not immediately respond to requests for comment.

Investors seemed pleased by the potential bid, sending shares of U.S. Steel up as much as 10 percent on Monday when CNBC reported the potential offer. Shares of U.S. Steel finished about 6 percent higher on Monday but are down 23 percent over the past year, including Monday’s spike.

But the fate of Nippon’s proposed takeover remains in limbo. U.S. Steel and Nippon sued the United States government last week in the hopes of reviving their merger, accusing Mr. Biden and other senior administration officials of corrupting the review process for political gain and blocking the deal under false pretenses.

The companies filed a separate lawsuit against Cleveland-Cliffs, Mr. Goncalves and David McCall, international president of the United Steelworkers union. They argue that Cleveland-Cliffs and the head of the union illegally colluded to undermine the Nippon deal, assertions that both defendants called “baseless.”

On Saturday, the companies said the Biden administration had delayed enforcement of its executive order blocking Nippon’s takeover until June, to give the courts time to review the lawsuit.

“The problem is, we can’t make anything happen until the current management and the current board of U.S. Steel make the decision to abandon the merger agreement with Nippon Steel,” Mr. Goncalves said at a news conference in Butler, Pa., on Monday.

Given this rancor, it is unclear how receptive U.S. Steel would be to a new bid by Cleveland-Cliffs. If U.S. Steel does not engage, one option would be for Cleveland-Cliffs to take an offer to shareholders.

U.S. Steel was once the world’s largest steel producer, but the company has fallen in global rankings in recent years. Concerns about its long-term future are rooted in a failure to quickly adopt alternatives to traditional mills that are more energy-efficient and cost-effective. Nippon, U.S. Steel has argued, is the only buyer that can make substantial investments in multiple steel mills and protect jobs.

The United Steelworkers, which represents 11,000 U.S. Steel employees, has voiced strong opposition to the proposed merger with Nippon. The powerful union has said the Japanese company engaged in illegal trade practices and dealt with the union in bad faith. Previously, the union expressed its preference for a merger with Cleveland-Cliffs, which is unionized.

A new bid by Cleveland-Cliffs, if it materializes, risks antitrust scrutiny from federal antitrust regulators, though regulators in the Trump administration are widely expected to take a less aggressive approach to merger enforcement than their Biden administration predecessors.

Business

Supreme Court denies oil industry plea to block climate lawsuits filed by California, other blue states

Published

5 hours ago

January 14, 2025

Press Room

Supreme Court denies oil industry plea to block climate lawsuits filed by California, other blue states

WASHINGTON — The Supreme Court dealt a major setback to the oil industry Monday, refusing to block lawsuits from California and other blue states that seek billions of dollars in damages for the effects of climate change.

Without a comment or dissent, the justices turned down closely watched appeals from Sunoco, Shell and other energy producers.

In Sunoco vs. Honolulu, the oil industry urged the justices to intervene in these state cases and rule that because climate change is a global phenomenon, it is a matter for federal law only, not one suited to state-by-state claims.

“The stakes could not be higher,” they told the court.

But none of the justices said they wanted to hear their claim, at least not now.

The decision clears the way for more than two dozen suits filed by states and municipalities to move forward and try to prove their claim that the major oil producers knew of the potential damage of burning fossil fuels but chose to conceal it.

“Big Oil companies keep fighting a losing battle to avoid standing trial for their climate lies,” said Richard Wiles, president of the Center for Climate Integrity. “With this latest denial, the fossil fuel industry’s worst nightmare — having to face the overwhelming evidence of their decades of calculated climate deception — is closer than ever to becoming a reality.”

Two years ago, California Gov. Gavin Newsom and Atty. Gen. Rob Bonta filed a lawsuit in San Francisco County Superior Court against five of the largest oil and gas companies — Exxon Mobil, Shell, Chevron, ConocoPhillips and BP — and the American Petroleum Institute for what they described as a “decades-long campaign of deception” that created climate-related harms in California.

“For more than 50 years, Big Oil has been lying to us — covering up the fact that they’ve long known how dangerous the fossil fuels they produce are for our planet,” Newsom said in announcing the suit.

In recent days, California officials have blamed climate change for the devastating weather conditions that contributed to the deadly wildfires that destroyed thousands of homes and other structures, leading to what many experts expect to become the costliest natural disaster in U.S. history.

California’s suit followed the pattern set by similar claims from the cities of Baltimore, New York, Chicago and San Francisco as well as blue states including Massachusetts, Connecticut, Rhode Island, New Jersey and Minnesota.

These suits argue that the oil producers used deceptive marketing to hide the danger of burning fossil fuels. Under state law, companies can be held liable for failing to warn consumers of a known danger.

In June 2024, the court asked the Justice Department to weigh in on the issue. In December, lawyers for the Biden administration urged the court to stand aside for now because the suits are at an early stage.

Justice Samuel A. Alito Jr. said he took no part in the decision to deny the appeals, presumably because he owns stock in companies affected by the dispute.

The climate change lawsuits were patterned after the successful mass lawsuits filed by states and others against the tobacco industry over cigarettes and the pharmaceutical industry over opioids.

Cigarettes and opioids were sold legally, but the suits alleged that industry officials conspired to deceive the public and hide the true dangers of their highly profitable products.

Under state law, plaintiffs can seek damages for broad and open-ended claims such as a failure to warn of a danger, false advertising or creating a public nuisance. All three claims are cited in California’s lawsuit. Federal law, by contrast, is usually limited to damage claims that are authorized by Congress.

Had the Supreme Court agreed to hear the oil industry’s appeal in the Hawaii case, it “would have frozen the cases for a year or more and could have resulted in a death blow for all of them,” said Patrick Parenteau, an environmental law expert at the Vermont Law School.

Los Angeles lawyer Theodore J. Boutrous Jr., who represents Chevron, said the company “will continue to defend against meritless state law climate litigation, which clashes with basic constitutional principles, undermines sound energy policy.”

Meanwhile, Alabama and 20 red states urged the court to throw out these blue-state lawsuits. They said liberal states and their judges should not have the power to set the nation’s policy on the energy industry. The court has not ruled on that claim yet.

The case dismissed Monday began five years ago when the city and county of Honolulu sued Sunoco and 14 other major oil and gas producers, alleging a failure to warn and creating a nuisance.

The Hawaii Supreme Court last year rejected the industry’s motion and refused to dismiss the suit.

“Simply put, the plaintiffs say the issue is whether defendants misled the public about fossil fuels’ dangers and environmental impact. We agree …. This suit does not seek to regulate emissions and does not seek damages for interstate emissions,” the state court said in a unanimous opinion. “Rather, plaintiffs’ complaint clearly seeks to challenge the promotion and sale of fossil-fuel products without warning and abetted by a sophisticated disinformation campaign.”

Business

How the NFL Moved the Vikings-Rams Playoff Game Away From the L.A. Fires

Published

12 hours ago

January 13, 2025

Press Room

How the NFL Moved the Vikings-Rams Playoff Game Away From the L.A. Fires

Matthew Giachelli got the call he anticipated on Thursday morning: The N.F.L. was moving the Rams’ playoff game to Arizona because of the wildfires raging in Los Angeles, and the league needed 200 gallons of paint pronto.

The game on Monday between the Rams and the Minnesota Vikings would now be held at State Farm Stadium outside Phoenix, and it had to look and feel as if it were being played in the Rams’ usual home, SoFi Stadium. That included painting the field with the team’s and league’s logos and colors. The hometown Cardinals, though, did not have some of the needed hues on hand, including the Rams’ blue and yellow.

Giachelli’s company, World Class Athletic Surfaces in tiny Leland, Miss., provides paint to most N.F.L. and top college teams. Within hours, he and his co-workers had loaded five-gallon buckets of nine custom paint colors, as well as stencils for the N.F.L. playoff logos, onto a truck that left Thursday afternoon on a 1,500-mile journey to Arizona.

“I definitely regret what’s going on in California, but I’m glad we could meet their needs,” said Giachelli, the vice president of production and distribution.

Getting the right paint was just one of hundreds of details that the league, the Rams, the Vikings, the host Arizona Cardinals and ASM Global, which operates State Farm Stadium, have juggled since the N.F.L. decided to move the wild-card round game.

The N.F.L. has canceled preseason games and postponed and moved regular-season games over the years because of hurricanes, snowstorms and other calamities. But it had not moved a winner-take-all playoff showdown since 1936, when the site of its championship game was changed from Boston to New York to drum up ticket sales.

A battalion of people — from the front-office workers to the training staffs to the thousands of game-day workers — have been mobilized on short notice. Each game, particularly in the playoffs, generates tens of millions of dollars for television networks, advertisers and stadium operators, and with the season coming down to its last few weeks, there was little margin for error.

“If it can be played, they play it, and in this case, it can be played in Glendale,” said Joe Buck, who will call the game for ESPN on Monday. “We’re in the playoffs now, and you’ve got all this pressure to get this first round finished before Kansas City and Detroit,” which had first-round byes, “get back in.”

A big reason the N.F.L. is the world’s most valuable league is scarcity. There are just 272 regular-season games and 13 playoff games, so each one is of critical importance to the 32 teams. (By contrast, there are about 400 Major League Baseball games every month during the season.) They are also critical to the owners of those teams and the league, as well as broadcast networks, sponsors and other companies that spend billions of dollars a year to attach their businesses and brands to the N.F.L.

It has not escaped notice that one of those businesses, State Farm, will have its name attached to Monday night’s broadcast less than a year after it announced that it would not renew 30,000 homeowner policies and 42,000 policies for commercial apartments in California. (The N.F.L. has donated $5 million to Los Angeles relief efforts.)

With so much riding on each contest, the N.F.L. does everything it can to play every game every year. When the league creates its season schedule each spring, it prepares contingency plans including an alternate site for each game. In 2022, when a massive snowstorm hit western New York, the Buffalo Bills played a home game at Ford Field in Detroit.

During the pandemic, outbreaks in locker rooms forced the league to postpone several games, though none were canceled. When pandemic conditions in Santa Clara County, Calif., deteriorated, the San Francisco 49ers moved to Arizona for a month, playing three home games in State Farm Stadium. Arizona was also a backstop in 2003 when the Chargers moved their home game against the Miami Dolphins because of fires in San Diego.

This time, the fires spread so quickly, the league decided to move the game five days before kickoff. Kevin Demoff, the president of the Rams, said the team had been in constant contact with officials in Los Angeles, who initially thought the game could be held at SoFi Stadium in Inglewood, which was unaffected by the fires.

But that changed midweek, when fires broke out close to the team’s training facility in Woodland Hills, forcing some players and staff to evacuate their homes and for one practice to be cut short. Demoff said he did not want the players and staff to be distracted, nor did he want city and county resources to be diverted for the game when they could be used to help others in need.

Moving the game is “just a recognition that there’s some things bigger than football and we owe this to our community to make sure that this game can be played safely and not be a distraction,” Demoff said Friday.

ESPN was on hold as well. Four of its production trucks were en route to Los Angeles from Pittsburgh when the league told the network on Wednesday night that the game could be moved to Glendale. The crews spent the night in Kingman, Ariz. On Thursday, the plan was to set up in both stadiums in case the league waited until Saturday to decide where to play. So the trucks continued on to Los Angeles while another set of trucks left for Glendale. When the N.F.L. said Thursday that the game had been moved, the first set of trucks, which had reached Ontario, Calif., turned around and arrived in Glendale with time to spare.

The Cardinals also helped out the Rams in ways beyond just lending their stadium. The team’s owner, Michael Bidwill, sent two team planes to Los Angeles to help the Rams get their entourage and equipment to Arizona.