FOCUS: How Trump Struck a Deal to Profit off the Foreign Labor He Says Is Killing U.S. Jobs
Donald Trump wanted to market a line of men’s clothes that would bear his name.
He told people working with him to help find a company known for producing quality merchandise on a mass scale. In the end, Trump signed on with Phillips-Van Heusen, a manufacturer of affordable shirts produced in factories in 85 countries.
The 2004 deal – one of the first of many merchandise-licensing arrangements in which Trump attached his name to products made by foreign workers and sold in the United States – is relevant today as the billionaire businessman wages a populist presidential campaign in which he accuses companies of killing U.S. jobs by moving manufacturing plants overseas to take advantage of cheap labor and lax workplace regulations.
Documents and interviews reveal the personal role that Trump played in negotiating the deal. Participants said they could not recall Trump expressing a preference that products be made in the United States.
“Finding the biggest company with the best practices is what was important to him,” said Jeff Danzer, who was vice president of the company hired by Trump to broker the deal. “Finding a company that made in America was never something that was specified.”
Today, Donald J. Trump Collection shirts – as well as eyeglasses, perfume, cuff links and suits – are made in Bangladesh, China, Honduras and other low-wage countries.
Trump’s daughter Ivanka, a vice president at his company and frequent campaign surrogate, markets hundreds of additional products under her own line of jewelry and clothing, many of which are made in China.
The contradiction between Trump’s business decisions and his political agenda illustrates the sometimes-awkward transformation of an aggressive, profit-oriented marketer and real estate mogul into a firebrand champion of the struggling working class.
When Trump began cutting licensing deals more than a decade ago, many business executives and politicians in both parties argued that free trade and overseas production were beneficial to everyone – a needed boost for poor, developing economies abroad and a path to cheap goods for middle-class consumers in the United States.
Trump, though, has emerged as the Republican presidential front-runner largely by tapping into growing anger among many voters who think more-liberal trade policies – such as the ones that have added to Trump’s personal fortune – have devastated U.S. communities that have lost manufacturing jobs to Mexico, China and elsewhere.
Trump’s rivals and other critics say he is a hypocrite, enriching himself with overseas labor while blasting the practice for political gain.
Representatives for the Trump Organization did not respond to requests for comment, and a spokesman for Ivanka Trump’s product line declined to comment.
On the campaign trail, Trump the candidate has blasted Ford Motor Co. for opening factories in Mexico, criticized a U.S. drug company that moved its headquarters offshore and said he will eat no more Oreo cookies because its baker, Nabisco, moved part of its production to Mexico.
When news broke three weeks ago that Carrier was moving 1,400 jobs from a plant in Indianapolis to Monterrey, Mexico, Trump wrote on social media: “We cannot allow this to keep happening. It will NOT happen under my watch.”
Moreover, Trump has mentioned labor conditions overseas in support of his position that goods should be made in the United States, telling CNN last year that Chinese laborers are “paid a lot less and the standards are worse when it comes to the environment and health care and worker safety.”
Trump has embraced the disconnect. As he explained during Thursday night’s Republican debate, he knows how to fix the policies that encourage outsourcing because he spent so many years successfully taking advantage of them.
“Nobody knows it better than me,” he said. “I’m a businessman. These are laws. These are regulations. These are rules. We’re allowed to do it. . . . But I’m the one that knows how to change it.”
Trump’s rivals for the Republican nomination have tried – so far to no avail – to undercut his popularity among working-class voters by portraying him as someone who rampantly outsources jobs. A similar line of attack proved effective four years ago against then-GOP nominee Mitt Romney.
Sen. Marco Rubio, R-Fla., called on Trump during a March 3 debate to announce that “all the Donald Trump clothing will no longer be made in China and in Mexico but will be made here in the United States.” Trump dismissed the statement, arguing that China’s currency policies “make it impossible for clothing makers in this country to do clothing in this country.”
Critics say Trump is being disingenuous.
Robert Lawrence, a professor of trade and investment at Harvard’s John F. Kennedy School of Government, has reviewed Trump-brand products for sale online and found that a large percentage are imported.
For example, the website selling Ivanka Trump’s merchandise line links to 838 products – 628 of them imported. Of those, 354 are from China, a country that Donald Trump often says takes advantage of a large U.S. trade deficit.
In addition to her own website, her products also had been marketed alongside her father’s on the Trump Organization website. But, amid criticism last week of the family’s outsourcing practices, his daughter’s page was removed.
“I don’t decry what he and his daughter do,” said Lawrence, who served on the Council of Economic Advisers under President Bill Clinton. “But at the same time, for him to claim that this is somehow immoral and go after companies that have relocated manufacturing when he has done the same puts him in conflict with his own rhetoric.”
Lawrence estimated that Trump’s $250 suits made in China would suddenly be priced in the United States at $350 or more. “The impact would be staggering and widespread,” he said.
Michael Strain, deputy director of economic policy studies at the conservative American Enterprise Institute, said that Trump’s trade rhetoric is “deeply irresponsible,” because isolating the U.S. economy could devastate businesses and hurt consumers.
Trump struck the 2004 deal with Phillips-Van Heusen, which owns
The shirtmaker used factories in some countries, including Bangladesh, China and Honduras, where labor violations such as forced overtime are common, according to Scott Nova, executive director of the Worker Rights Consortium, a group that monitors factory conditions.
The agreement signed by Trump and Phillips-Van Heusen placed no restrictions on where Trump dress shirts, tuxedo shirts and neckwear could be manufactured.
Phillips-Van Heusen agreed that any products “manufactured by it or for it anywhere in the world” would not be made using child labor “as defined in the relevant jurisdiction of production,” according to the contract, which was filed in a later New York state lawsuit between the broker company and Trump.
Mark Weber, who was chief executive of Phillips-Van Heusen at the time, said the company employed a “global sourcing network” to produce clothes for Trump’s line and other brands.
Weber described Trump as a master negotiator who correctly predicted the brand would be a smashing success and persuaded a wary Phillips-Van Heusen to sign on.
In a deposition filed in the New York lawsuit, Trump recalled that the massive clothier had been eager for the deal. “They were very hot to make a deal with us,” Trump said, according to a deposition transcript provided to The Washington Post by Jay Itkowitz, an attorney for the broker company that unsuccessfully sued Trump.
Weber, who is supporting Trump for president, said he concluded at the time that Trump was a patriot.
“He had a clear preference to support American values and what was good for America,” Weber said.
Asked whether Trump ever specifically expressed a preference for items bearing his name to be made in America, Weber said, “you’re asking me for specifics that are very hard to recollect.”
Weber said that at the time, the industry’s widely shared goals – promoted through overseas production – were to improve standards of living for workers in the third world and to offer U.S. consumers lower prices.
“That was a time when America was very much in favor of building a better life for the people of our hemisphere,” he said, referring to factories in Central America.
“While we care about Americans, we care about people all over the world, too,” Weber said.
“No one can tell us where to make our products,” said Weber, who left the company in 2006. “I have never signed a contract in my 40 years of experience where someone could tell me where to make my goods.”
After Trump drew scrutiny over the summer for disparaging comments about Mexican immigrants, Macy’s, which sold his clothing line, announced it was ending its relationship with him. Phillips-Van Heusen, now called PVH Corp., quickly followed suit, saying that its licensing deal with Trump would be unwound.
Dana Perlman, a spokeswoman for the company, said this week that it no longer manufactures Trump clothing and declined to comment further.
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