The day after President Trump rattled world markets by suggesting a trade war that could inflame China, he dined at his Mar-a-Lago Club in Florida with a Palm Beach neighbor and billionaire financier who for more than a year had striven to prevent such a move.
Stephen Schwarzman, chief executive of the Blackstone Group, a private equity giant, had declined to give Trump’s campaign money or endorse him during the 2016 presidential race. But since the election, Schwarzman has emerged as one of Trump’s most generous donors, as well as a key adviser with rare and regular access to the president.
The New York investor, who has one of the closest relationships to Beijing of any American executive, is in many ways the president’s de facto China whisperer — helping to persuade the man who said Beijing’s leaders were “raping” the United States not to follow through on a campaign promise to declare China a “currency manipulator.”
But on this night, on the patio of the president’s estate, Schwarzman’s pull on Trump was being tested anew. The president said a trade war started by new U.S. tariffs could be successful, according to a person with knowledge of the conversation.
Through a spokesman, Schwarzman declined to reveal his response, but associates said his main message to Trump over the past 14 months has been consistent: Keep in mind the broader importance of the U.S.-China relationship.
A few days later, on March 7, Trump signaled that he was open to a compromise with Beijing on trade. “China has been asked to develop a plan for the year of a One Billion Dollar reduction in their massive Trade Deficit with the United States,” he tweeted. “Our relationship with China has been a very good one, and we look forward to seeing what ideas they come back with.”
Trump proceeded last week to impose tariffs on steel and aluminum imported from countries such as China, a move met with threats of retaliation worldwide. However, he softened the blow by saying he had “great respect” for Chinese President Xi Jinping, who has relied on Schwarzman as a go-between since Trump’s election.
The relationship is rooted in business: Until recently, the Chinese government had a significant stake in Blackstone, which does billions of dollars in business in China. Schwarzman has said others consider him an “unofficial ambassador” between the countries, and he endowed a Chinese college in his name.
“Mr. Schwarzman has a good understanding of China, China’s polices, the complexities of the economic relationship between us due to this long involvement in China,” Cui Tiankai, China’s ambassador to the United States, said in an interview last month at the Chinese Embassy in Washington.
A White House spokesman did not respond to requests for comment. Schwarzman declined to comment.
Schwarzman may have lost this round on China. And Trump could further strain bilateral relations with his decision on Monday to block Broadcom’s bid for Qualcomm on national security grounds, apparently because of concerns that it might give China an edge in sensitive technologies. But Schwarzman’s ongoing relationship with the president — particularly after the departure of White House economic adviser Gary Cohn — leaves him as one of the last remaining free-trade advocates with a direct line to Trump.
“I don’t think it changes one iota,” said Mark Weinberger, the chief executive of the accounting giant EY, who served on a White House council of CEOs with Schwarzman. “In Washington, there will be another issue, and you have to play the long game and continue to be a trusted adviser.”
In 2007, Trump and his wife, Melania Trump, attended Schwarzman’s 60th-birthday party, which resembled an ostentatious scene from “The Great Gatsby.” A Manhattan armory was decorated to replicate Schwarzman’s 35-room Park Avenue apartment, once owned by John D. Rockefeller Jr. Rod Stewart and Patti LaBelle performed.
Shortly after the bash, in March 2007, Blackstone went public. Beijing Wonderful Investments, controlled by the Chinese government, bought 9.9 percent of the company’s shares, a $3 billion stake.
Schwarzman said in a Bloomberg News interview that China had not made a stock investment in a foreign company since World War II. When he asked how the deal would be arranged, he said he was told, “The premier himself must approve” it.
The investment was a fraction too low to trigger a U.S. national security review. (The Chinese had reduced their stake to 4.5 percent by last year, and have sold their remaining shares since then, according to a Securities and Exchange Commission filing last week.)
Schwarzman’s party and wealth made him a symbol of Wall Street excess. His stake in Blackstone was valued in the public offering at $7 billion. Although the 2007 financial meltdown devastated many companies, Blackstone grew significantly, boosting his fortune.
Blackstone now says it employs 412,000 people through its ownership of dozens of firms, and it ranks as the world’s largest private equity firm and private real estate investor.
Schwarzman, 71, has a net worth of nearly $13 billion and is ranked by Forbes Magazine as the nation’s 35th-wealthiest man; Trump ranks 248th. A company filing said Schwarzman earned at least $800 million in 2017, one of the highest compensation levels ever for a chief executive of a publicly traded firm.
Schwarzman, a longtime Republican, informally has advised both GOP and Democratic administrations, but his financial support has gone almost entirely to the GOP. He contributed $100,000 in 2016 to a political action committee supporting presidential candidate Jeb Bush and gave $4.7 million to committees supporting Republican congressional candidates.
He gave nothing to Trump.
“I’ve known Donald for 40 years, and he is the P.T. Barnum of America,” Schwarzman said on CNN in November 2015, referring to the 19th-century circus promoter, declining to endorse his friend. Still, he said Trump’s “political incorrectness” was “good for democracy.”
A CNN interviewer asked Schwarzman whether he could back Trump in light of his China position. Trump had said China’s leaders “are the greatest currency manipulators ever.”
Schwarzman ducked the question, saying, “It’s one thing to get a job, it’s another thing to do a job.”
Schwarzman’s refusal to contribute to the campaign or endorse him miffed Trump, according to an associate who said the candidate repeatedly asked: “What about Schwarzman?”
After the GOP primaries, Schwarzman met privately with Trump but still made no endorsement, according to two people familiar with the session. During this time, Blackstone’s real estate division did business with Trump’s son-in-law, Jared Kushner, lending $312 million to Kushner Cos. and its Brooklyn partner around the time of the Republican National Convention.
On Sept. 10, 2016, Schwarzman went to the Beijing campus of Tshinghua University to announce a one-year master’s program named for him and endowed through his donations. Schwarzman had given $117 million and raised an additional $450 million.
At the opening ceremonies, Schwarzman praised Xi for recognizing that fear and misunderstanding can pull apart countries.
Back in the United States, Trump was declaring on the campaign trail that Beijing’s leaders were “raping” the United States.
But the two men came together after the election.
It was a mutually beneficial arrangement, according to associates of both. Schwarzman called Trump to congratulate him on his victory and offered to help. Trump lacked connections to corporate leaders outside of real estate, and he determined that Schwarzman would be the best person to help him develop relationships with some of the country’s most influential chief executives. He asked Schwarzman to head a White House group of business advisers.
The Blackstone chief was “the most natural choice” to assist Trump, said Hamilton James, the company’s executive vice chairman.
“The people Trump knew were the people in real estate,” James said. “Even then it wasn’t that big a network, but even then people were hesitant to deal with him. So he had to turn to someone to pull this together.”
About the same time he was selected by Trump for the White House post, Schwarzman contributed $250,000 to Trump’s inaugural committee — beginning a surge in donations that has made him one of the biggest financial supporters of the president and the Republican National Committee.
Schwarzman’s selection was not well received by some in the president’s inner circle. Because of his close ties to China, some of Trump’s advisers considered him the epitome of the kind of globalism the president deplored during his campaign. And there was irritation that he had held back financial support during the 2016 race.
“At the time, he didn’t have a lot of supporters inside the transition because he hadn’t helped us at all,” said a Trump confidant involved in the discussions who spoke on the condition of anonymity to talk about internal matters.
Schwarzman cast his role as a guide to the global economy for the longtime developer and former reality television star. He noted that Trump’s “basic job” was in real estate, telling CNN in March 2017 that “there are a lot of things outside of that sphere which are new and different.”
China policy was a natural area for Schwarzman to expand Trump’s knowledge.
Former secretary of state Henry Kissinger, who helped open the door to U.S. relations with China under President Richard Nixon and has advised Trump on China, said in an interview that Schwarzman has a unique standing in Beijing.
“He understands the relationship between the political and the economic world better. . . . I have seen his results, and because he has done so many useful things in China, he has more access to the Chinese.”
That access was evident when, days after Trump’s inauguration, Xi pulled Schwarzman aside at the 2017 World Economic Forum in Davos, Switzerland.
The two had “an animated conversation about Trump’s perception of China,” said former Australian prime minister Kevin Rudd, a Schwarzman friend. Schwarzman sought to explain to Xi why Trump believes Americans feel shortchanged by globalism and the China trade deficit, Rudd said.
Then Schwarzman returned to the United States and briefed Trump and Treasury Secretary Steven Mnuchin about his talk with the Chinese leader, according to two people briefed on the matter. Mnuchin did not respond to a request for comment.
Schwarzman “is right up there in terms of being able to convey pretty direct messages in both directions,” Rudd said.
Trump, meanwhile, faced pressure to take action against China from a group of nationalist-oriented advisers headed by then-chief strategist Stephen K. Bannon. They considered Schwarzman a rival, according to Trump associates familiar with the dynamic. Bannon believed that the United States was at economic “war with China” and feared that Schwarzman would undo his efforts, the associates said. Bannon declined to comment.
More moderate administration players supported Schwarzman, and his influence grew as he arrived at the White House on Feb. 3, 2017, to chair the first meeting of the President’s Strategic and Policy Forum.
Trump told the group that he had known Schwarzman “for a long time” and added, “He’s done a fantastic job.”
The 16-member group included leaders of companies such as General Motors, JPMorgan Chase, Boeing, IBM and Walt Disney Co.
After members of the media left the room, Trump pushed the chief executives to accept his view that China was a currency manipulator, according to multiple people in attendance. Trump suggested that the Chinese were boosting exports at the expense of U.S. jobs. But the executives disagreed with Trump and pointed to contradictory evidence.
Turning to Jamie Dimon, the chief executive of JPMorgan Chase, Trump said, “Jamie, they are a currency manipulator, aren’t they?”
“No, Mr. President, they spent $1 trillion defending their currency,” Dimon said, according to a participant and a person briefed on the meeting, both of whom spoke on the condition of anonymity to describe private White House deliberations. Dimon did not respond to a request for comment.
Trump seemed stunned. “I thought I had it,” he said, according to a person in the room who spoke on the condition of anonymity to describe the conversation.
Weinberger, the CEO of EY, one of the world’s largest professional-services and accounting firms, said Schwarzman let others in the meeting convince Trump.
“The discussion immediately turned to, no . . . they are not manipulating their currency,” Weinberger said. “A trade war with China is not the best thing for us right now. . . . He didn’t obviously morph his position on everything, but he understood better and he started to modify some.”
Schwarzman then boarded Air Force One with Trump for a trip to Palm Beach, where Schwarzman owns a palatial home 1½ miles from Mar-a-Lago.
Schwarzman’s plans that weekend included his 70th-birthday party, an even more ostentatious affair than his 60th. In honor of Schwarzman’s China ties, the party was themed “The Silk Road,” with three-story temples, trapeze acrobats and “Oriental ribbon dancers,” according to the society magazine Avenue.
Schwarzman invited Trump, but the president, who was meeting with Japan’s prime minister at Mar-a-Lago, did not attend. His daughter Ivanka Trump, her husband, Kushner, and a number of Cabinet secretaries joined the party, where about 600 guests gathered to watch fireworks and listen to Gwen Stefani sing “Happy Birthday.”
Two months later, Trump prepared to meet with Xi at Mar-a-Lago. Schwarzman advised the president how to deal with the Chinese leader. “President Xi is a great guy,” Schwarzman told the president, as Trump later told the Washington Examiner.
Trump met with Xi for three hours and avoided contentious issues, as Schwarzman had advised, according to two people familiar with the session. Schwarzman attended part of the meeting informally, the people said.
A few weeks later, Schwarzman announced on CNN that “I don’t think that there’s going to be issues regarding China as a currency manipulator and some of the other things.”
At the time, Schwarzman’s firm had numerous deals with China. Blackstone in June 2017 sold a logistics firm, Logicor, for $13.8 billion to the China Investment Fund, which the Chinese government controls. That prompted a Hong Kong-based publication, Week in China, to write that “Schwarzman has become the go-to man for Chinese buyers.”
Separately, Schwarzman and Commerce Secretary Wilbur Ross convened a July meeting at the Commerce Department in Washington of 20 American and Chinese business leaders.
In August, the advisory group that Schwarzman headed was terminated after Trump lost business support because of his comments about a violent protest in Charlottesville. Trump said “many sides” were responsible for the clash that had been sparked by white supremacists and led to the death of one protester.
Schwarzman stood by the president, saying he “wasn’t outraged.” But the other chief executives convinced him that the panel should be shut down, even though some feared that Trump would become more isolated by losing their advice, according to a group member.
Schwarzman, meanwhile, had been criticized for his ties to Trump — including complaints from some of the scholars at Schwarzman College in Beijing.
“In life,” Schwarzman said in an email to the scholars, “you’ll often find that having influence and providing sound advice is a good thing, even if it attracts criticism or requires some sacrifice.”
In December, the man who hadn’t given a penny to Trump during the campaign contributed the maximum $344,400 to Trump Victory, established to jointly fund the president’s reelection campaign and the Republican National Committee, according to Federal Election Commission records.
He also held one of the year’s most successful fundraisers at his Park Avenue triplex, where two dozen donors paid $100,000 each for a lunch of grilled chicken and asparagus and listened to Trump give a 20-minute talk. Later that month, Schwarzman met privately with Trump at Mar-a-Lago.
Trump has sent mixed signals about how far he will go in accepting Schwarzman’s advice. He said during a November visit to Beijing that “I don’t blame China” for its trade policies, but he has expressed alarm that the United States had a record trade deficit with China in 2017.
But in January, Trump went to the ultimate globalist venue, the Davos summit, where Schwarzman had spoken with the Chinese president a year earlier.
This time, Schwarzman and Trump met privately at the summit, and Schwarzman publicly praised Trump for rebuilding the economy, presenting himself as one of the president’s most stalwart supporters.
“It’s a time of enormous ebullience,” Schwarzman said during a panel discussion at the Davos summit. “You are making money, and it is really not hard.”
Alice Crites, Josh Dawsey and Anu Narayanswamy contributed to this report.