Emanuel claims China trip has salvaged CTA rail car deal, despite Trump tariffs
Subscribe for unlimited digital access.
Try one month for $1!
Subscribe for unlimited digital access. Try one month for $1!
Mayor Rahm Emanuel declared victory Thursday on his business trip to Asia — by claiming to have salvaged a $1.3 billion rail car contract that is the largest in CTA history, in spite of President Donald Trump’s trade war with China.
Trump’s decision to stand toe-to-toe with China — by imposing 10 percent tariffs on $200 billion worth of Chinese goods — had local implications for CTA riders. It threatened to drive up the cost of purchasing the 846 new rail cars over the next 10 years.
The $1.3 billion rail car contract was awarded in 2016 to a joint-venture now known as CRRC Sifang America, which includes a company owned by the Chinese government.
As part of the deal, the joint-venture agreed to build a $100 million rail car assembly plant that created 350 jobs at 135th and Torrence in the Far South Side’s Hegewisch neighborhood.
Trump’s tariffs on imported Chinese products had the potential to substantially drive up the cost of the decade-long purchase because the cars are made of materials imported from China.
Mayoral challengers have been snickering about Emanuel’s decision to leave Chicago as summer violence heats up to lead what they view as a political junket. But the mayor’s office issued a press release on Thursday, proclaiming success in the “mission to China to protect 350 Chicago jobs threatened by a trade war.”
After an overnight meeting with Chinese Vice President Wang Qishan and executives from CRRC Sifang, the mayor’s office declared the meeting “productive” and the rail car plant and contract full speed ahead.
Chicago employees of the plant will soon begin traveling to China for training, the mayor’s office said.
“This project and the hundreds of jobs it will create should not fall victim to the Trump trade war,” Emanuel was quoted as saying in a press release.
“Thanks to Chicago’s strong international partnerships this project is moving forward and creating a new economic engine on Chicago’s Southeast Side.”
After the meeting, Emanuel was asked about the Chinese foreign ministry’s threat to take “firm and forceful measures” if Trump lowers the boom with a second round of tariffs on Chinese goods.
“They wanted to communicate, obviously, that this is not their preference,” the Associated Press quoted Emanuel as saying.
“They would rather work something out, but they’re not scared if this is where it goes.”
The South China Morning Post quoted Emanuel as saying he hoped to “hermetically seal” off Chicago from the fall-out from Trump’s trade war with China.
“We don’t want our relationships to be influenced by the winds of where the trade and tariff battles are,” the mayor was quoted as saying.
The mayor’s office did not explain who would absorb the added cost of CTA rail cars manufactured in Chicago with materials impacted by the tariffs — the contractor or the CTA.
The press release simply stated that the project was a go and claimed that Emanuel’s high-level meeting had salvaged it, giving the mayor yet another opportunity to bash his favorite political target: Donald Trump.
The mayor has been engaged in a running legal and political battle with Trump tailor-made to rebuild Emanuel’s national image and bolster his popularity among Chicago Hispanics most threatened by Trump’s immigration policies, and by the president’s threat to cut off funding to sanctuary cities.
Last spring, CTA spokesman Brian Steele noted that the contract was “signed two years ago” and that the CTA’s “expectation is that our vendor will comply with all the federal requirements that apply to this contract.”
He was apparently referring to a “Buy America” clause that requires a minimum of 69 percent of rail car components to be produced in the U.S.
The potential for added costs tied to the Trump tariffs were just the latest chapter in a rail car contract that has been controversial from the get-go.
The CTA rejected a first round of bids and ordered a second round, ending in the selection of the Chinese joint-venture. But losing bidder Bombardier contended the $1.3 billion deal was “rigged” and that the CTA “took direction” from Emanuel, who ballyhooed the Far South Side assembly plant and the jobs it would create.
Bombardier said its bid racked up 73.4 percent of all possible points in five areas, versus CSR’s 68.2 percent.
But Steele has noted that CSR’s bid was $226 million less and was deemed the “best overall value” to the CTA. Although Bombardier drew higher total scores, the two companies were close on the most important category, involving technical elements, he said.
An internal “CTA decision-maker” ultimately concluded Bombardier’s claims “have no supporting evidence and are without merit,” Steele said.
Last week, the U.S. imposed tariffs on $34 billion in Chinese products. China retaliated with 25 percent tariffs on $34 billion in American goods.
Earlier this week, the Trump administration released a list of $200 billion worth of Chinese goods it intends to hit with the 10 percent tariffs after a review process.