Trump's 'buy American' policy conflicts with his own hotels
The moves align the new administration against "globalism" and free trade — a stance further emphasized by Press Secretary Sean Spicer's recent suggestion that a 20% tax on imports from Mexico could help fund Trump's proposed border wall. But an examination of US hotels owned by the Trump Organization reveals just how much they rely on foreign imports, a practice that could come under fire from his own administration.
The rooms in Trump hotels are adorned with furniture and products that have traveled farther than most guests. Sets of toiletries in the bathroom were imported from Central America, shipped to the US from the Trump Hotel in Panama City. Headboards, tall and grand and often covered in velvet or leather, came from Jiashan, China. Light fixtures were brought in from Kamenický Šenov, a town in the Czech Republic.
To track where Trump hotels buy goods, Business Insider consulted ImportGenius, a company that compiles data from US Customs into proprietary databases. The resulting list shows Trump's businesses have imported furniture, fixtures, building materials, apparel, and supplies from more than 15 countries since 2012. Over the past two years, the companies have received shipments nearly 50 times.
In his inauguration speech, Trump reiterated his commitment to domestic manufacturing. "We will follow two simple rules: Buy American and hire American," the president said. But that agenda stands in conflict with the Trump Organization's business practices.Buying globally
On November 25, the Trump Doral — an 800-acre golf resort in Miami — received a 924-pound shipment from Hong Kong that included golf-club covers. In January 2016, the Doral received two containers of massage beds (15,290 pounds' worth) from Moers, Germany. In February 2015, the hotel received 18,566 pounds' worth of logo-emblazoned dark-brown ice buckets with accompanying lids and trays, sent from Nonthaburi, Thailand, to Los Angeles.
The information about these shipments comes from bills of lading, which note everything a ship is carrying as well as who is sending and receiving the cargo. Michael Kanko, the CEO of ImportGenius, tells Business Insider that the company compiled the data by pulling all the records connected with the businesses and addresses that Trump listed in his public financial-disclosure forms.
"We painted a picture of Trump's reliance on foreign imports by searching our global-shipping databases for cargo movements related to Trump companies," Kanko says. The list is incomplete — because products might not have been made in the cities they were shipped from, and items that arrived in the US by truck or plane are not included — but it does show the globalized nature of the Trump family's hospitality empire.
Trump hotels are not alone in the practice of sourcing furnishings, fixtures, technology, and supplies from other countries.
"It's certainly common in the hospitality world to import supplies and decor from overseas, especially China," Kano says.
Arthur Dong, a professor of strategy and economics at Georgetown University's McDonough School of Business, has consulted for companies in the hospitality industry, and says people would probably be shocked by how many components of US hotels come from foreign sources.
"The irony of this situation is that it's pretty well known within the hospitality industries that there are global vendors who supply many of the hotel chains around the world," he says, referring to the contrast between Trump's rhetoric and his family's business practices. (Four Seasons, Marriott, and Hilton all declined to comment on their practices.)
"President Trump will be, in a sense, hurting some of his own business interests by putting up these barriers," Dong says.The new free-trade debate
Throughout his campaign, Trump repeatedly promised to renegotiate the US's free-trade agreements, claiming they kill American jobs by making it easy for companies to move production overseas or import products from foreign manufacturers. His executive order on the TPP likely kills that trade deal, which was negotiated under President Obama but was not ratified by Congress. The TPP would have created stronger economic ties between the US and 11 other countries — including Japan, Vietnam, Canada, and Mexico but not China — by reducing tariffs and other restrictive policies for trade between them.
Trump is expected to soon issue an executive order to renegotiate NAFTA, a deal that eliminated most tariffs on goods traded between the US, Canada, and Mexico. He has called NAFTA, which was negotiated by George H. W. Bush and later approved by Bill Clinton, "the single worst trade deal ever approved in this country."
Since World War II, trade deals have been largely embraced by both Democrats and Republicans because economists have found the agreements drive economic growth. Until Trump campaigned in opposition to free trade, most criticism of TPP and other deals came from progressives like Bernie Sanders, who said free trade creates winners and losers, even though overall gains might outweigh losses. A corporation may profit from access to foreign markets with lower wages, but domestic workers could consequently lose their jobs.
Since the election, Trump has stuck with his anti-free-trade rhetoric. On January 23, he suggested he would impose a "very major" border tax on companies that move their operations outside the US. In December, CNN reported that Trump's transition team was considering a proposal to instate a 10% tariff on imports to increase domestic manufacturing. In a meeting with The New York Times a couple of weeks later, Trump suggested he would favor a 45% tariff on Chinese exports to the US.
Yet many of Trump's imports come from China. ImportGenius' data shows that Trump has received 20 shipments from the country over the past five years, as well as 17 from Hong Kong. (The largest shipment received in 2016 had six containers — weighing a total of 217,382 pounds — full of Miss Universe-branded Chi hair straighteners and hair dryers, which were shipped from Shenzhen to Houston in September.)
Made in USA
Susan Helper, a professor of economics at Case Western Reserve University and the former chief economist at the US Department of Commerce, says that imposing higher tariffs could lead more hotel chains to buy things like furniture or light fixtures from US makers. But that will depend on what kinds of changes the administration makes.
"If there are tariffs just on a couple countries like China or Mexico, then stuff can move to other countries," she says, suggesting that companies might simply find production facilities elsewhere or start buying from places that aren't subject to higher fees. "If it's across-the-board tariffs, then you'd be more likely to see stuff come to the US."
While Trump hasn't said much about the origins of items in his hotels, he has repeatedly acknowledged that his clothing was manufactured abroad. (Shipping data shows that much of Ivanka's line is too.) When pressed, Trump has said he'd like to buy domestically made products but that it was hard to find them.
"They don't even make this stuff here," Trump said on ABC, after anchor George Stephanopoulos suggested he should lead by example.
Trump only mentioned apparel and TVs in relation to that claim (it is true that no TVs are 100% US-made), but when it comes to headboards and chairs, there are plenty of domestic manufacturers that furnish hotels.
"It's certainly very possible and it's certainly not difficult," says Amy Wolbert, senior vice president at Kindel Furniture, which is based in Grand Rapids, Michigan. Wolbert is quick to acknowledge, however, that furniture is generally more expensive when made in the US. "The project has to have budgets that will support it. Everything comes down to budgets."
Kindel, which was founded in 1901, provided a couple of pieces for Trump's new International Hotel in DC: a coffee table and leather armchair. Wolbert says that while Kindel sometimes makes pieces for hotels, its furniture is so high-end that the company usually sells only a few items at a time, rather than furnishing every room.
"We seek to do more commercial work because it helps us grow and it helps increase volume and shipments," she says. "It's always great to get that kind of work because it helps balance out the consumer who's going to buy a sofa one year and then maybe not buy furniture again for two, five, seven years."
Wolbert says she's watched many Michigan furniture makers pack up shop, a phenomenon that Dong says has been the case nationwide. Trump's trade policies could shift the market back in favor of US makers, he says, or even incentivize foreign companies to establish furniture factories in the US. But companies might also just start making components overseas and assembling the parts in the US so that they can get a "Made in USA" label and avoid tariffs.
'His credibility would go up'
Wolbert isn't sure whether policy changes like the ones Trump is proposing would bring Kindel more business. But she points out that there are other good reasons (besides US jobs) for clients to buy furniture from American makers, since they can deliver and repair products much faster.
Helper says switching to domestic manufacturing could even save money because of those factors. In addition to lowering shipping costs, she says, eliminating the long lead time provides other benefits.
"What companies sometimes do is order more than they think they're going to need and put it in their warehouse in case," she says. "This is particularly an issue in clothing. The average apparel company that's importing from China may import three times as much as they expect to sell so they're covered in case there's a run on demand. So there's just a huge amount of waste."
If hotel chains do start buying more American-made products, however, they'd most likely have to find ways to accommodate the higher prices — either by cutting budgets elsewhere or charging guests more.
"The cost will be passed onto the consumer in the way of higher room rates, because they're confronting higher costs on many of the inputs," Dong adds.
But he says that the president would be wise to put his money where his mouth is, regardless of those challenges.
"If he doesn't start buying from American sources, it'll make him look a little bit hypocritical," Dong says. "His credibility would go up if he were to direct his company managers to start sourcing [in the US], and I believe that when they start doing that, they're going to make it very public to make Americans aware that he's going to eat his own cooking."
It is unclear what effect Trump's trade policies will have, on his businesses and the US economy.
"It's certainly different and it's certainly upending some assumptions," Helper says of Trump's approach. "And some of it could be really bad, but some of it could be OK."