Let the Trade Wars Begin!

Dig this.

At the behest of the most protectionist Congress in memory, Mr Obama may be about to repeat, at the dawn of his presidency, the same historic error that the much derided Herbert Hoover made just before quitting the White House in 1933. In the depths of the Great Depression, he signed into law the innocent-sounding Buy America Act. It required the US Government to use American suppliers in all public contracts. Less notorious than the Smoot-Hawley Tariff Act, “Buy America” did huge damage. It proved a disaster for US manufacturing exports and the global economy. Other governments followed suit, and it took decades to begin to reverse the closure of markets.

Now, prodded by America's mighty steel lobby, a key congressional committee has voted, 55-0, to attach a still more rigorous “Buy America” clause to President Obama's stimulus package. It bars federal funding of any public projects “unless all of the iron and steel used is produced in the United States”. The clause could be extended to asphalt, cement, heavy machinery, you name it. US dollars, the committee intones, must be used to create “American jobs in America, not Chinese jobs in China”.

From the comments on that article comes a particularly prescient bit by dhome in Sydney, Australia.

The amusing thing about this is; that in order to fund its “trillion dollar deficits for the foreseeable future.”(Obama) ; the US needs to a) grow it exports to and b) get Treasury bonds bought by the very countries that it is intending to launch a trade war against.

Bingo, dhome.