It may have seemed like a good idea at the time, but the "Buy American" clause in the federal stimulus bill has boomeranged.
The policy mandates that steel and manufactured goods purchased with government stimulus money must be manufactured in the United States.
Legislators who approved this stipulation may have forgotten that we're living in a global economy, but the rest of the world has not.
Other nations, including our neighbor and No. 1 trading partner Canada have lost business, jobs, and tax revenues as a result of the protectionist U.S. law and the possibility of a trade war now looms.
The Federation of Canadian Municipalities voted recently to exclude U.S. manufacturers from bidding on purchasing opportunities in Canada. U.S. firms may thus lose $15 billion in annual sales of goods and services to Canadian cities.
The U.S. Chamber of Commerce and the Canadian Manufacturers and Exporters, the nation's largest trade and industry association, are now attempting to persuade the Obama administration to relax the “Buy American” rules so that their trading partners don't take economically destructive countermeasures.
Sharing the growing opposition to the "Buy American" rule are World Bank President, Robert Zoellick, and former U.S. Secretary of State Madeleine Albright.
"The philosophy of every nation for itself will not lead us out of the recession — it could drive us instead toward an economic Armageddon," said Albright.
China, meanwhile, has recently imposed a "Buy Chinese" rule, requiring their economic stimulus recipients to buy domestic goods only.
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