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Buy American

May 24, 2009 8:00 AM

The stimulus package includes a "buy American" clause that the steel and other U.S. industries lobbied hard for. However, U.S businesses that export overseas now fear foreign governments will retaliate.

Could "Buy American" Rule Spark Trade War?
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by avhummer May 30, 2012 3:15 PM EDT
the CEO of NUCOR clearly has no conceptual understanding of free trade. he talks about buying US steel with the stimulus money, steel that will be more expensive, so more money will be spent on buying the supplies for the projects than will be paying American wages to actually do the work. the employees make it sound so tragic that their salaries have been cut in half from $87,000 (almost 6 figures! for working in an automated mill!) to $43,000 and now they have to "eat ham sandwiches". i have a few questions for them; what kind of education is required to work in a steel mill? and since when can people not live on $43,000 a year? my family's income was more than cut in half when my father was laid of, costing our family both his salary and his benefits. we have pushed through, even while paying for things many American families do not buy, such as private school tuition. $87,000 for relatively unskilled labor (I'm sure i could quickly learn how to operate one of those machines and that's all their job seems to require) is damn good, and their wages will recovery with the economy. its just economics, that's how it works. if the CEO had any kind of background in business, economics, world markets, history etc. he would understand that. the kind of protectionism he is advocating could easily result in trade wars and that is exactly what brought the world, not just the US, into the great depression in the 1930s when congress enacted the smoot-hawley act. we set higher tariffs and other countries retaliated by doing the same, driving prices up while people were already jobless and struggling to sustain their families. tariffs drive up prices for domestic goods as well as foreign goods because domestic producers can charge prices closer to those of the imported tariffed goods. all these things do is protect the industry (they can charge more) and pass the cost onto the consumer (the US citizens this is somehow meant to protect.) the General Agreement on Trade and Tariffs (GATT) was enacted in 1947 with the purpose of liberalizing trade by eliminating tariffs, subsidies, import quotas, etc. what followed came to be known as the great 30 years in which the economy grew at record rates. you know how the 50s are heralded as a time of great American prosperity? it was because of GATT. like they say, "history is the best predictor of the future" and i sure don't want to see another depression in our future. the problem is that few people in our country are educated enough to understand these simple principles of economics. world trade is not a zero-sum game. everyone must give up a little so that everyone can gain a lot. subsidizing struggling industries only serves to prop them up and make them reliant on government support or control of competition so that they become less efficient while their cost to the taxpayers and the cost of their goods goes up. in 1984 when the coal miners went on strike because they were denied a 35% pay raise, 75% of Britain's coal mines were unprofitable, meaning they were losing money when they paid most of those miners to work. does that sound like a situation we want in America? unprofitable businesses supported by the government? we already do in the agricultural industry which is supported by our government which keeps food prices artificially high and does not allow developing nations who are more efficient (aka more profitable) at food production to develop any industry, so they continue to languish and rely to heavily on American aid. because of sugar tariffs the price of sugar is artificially high in this country and food manufacturers pay on average 50% more than the world price for sugar. now, how much of this sounds fair to you? we already pay more for food than we should because of the government, should we pay more for our infrastructure projects, cars, and anything else made with steel, too?
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by knewsreply August 1, 2011 9:01 AM EDT
We have given our patents and manufacturing operations to China and other Asian countries. We have lost jobs, jobs, and more jobs. We have become more of a "Service Nation" than the great Manufacturing Nation we became after WWII. This "Buy American" is a good big step to more American Jobs. China didn't care about what others thought when they took our patent rights, copied our products, and manufactured these items in China, so should we be conserned with what China and others think when we bring our manufacturing back to the USA?
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by preparednessisall July 12, 2010 9:06 PM EDT
The Buy American legislation allows the government to purchase foreign steel (and other materials and products) under several conditions, including excessive price (>25%) or inferior quality. from this standpoint, it does not completely interfere with free trade. Interestingly, the Nucor CEO indicated that business was booming before the financial crisis, and this certainly demonstrates that US industry is capable of competing with foreign suppliers without the Buy American legislation (in a "normal" economy). Foreign competitors did not cause the financial crisis, and purchases of foreign made goods did not crash our economy. There is lots of evidence that the expanding global economy creates lots of new opportunities in the US. The global market does not require that gains elsewhere create losses here. We have market share losses to foreign competitors, but (specifically in the auto industry) market share gains have boosted foreign direct investment in the US and create jobs here to produce foreign name brands (look at American content of the best selling car - Toyota Camry). Expansion of the global market place and of economic freedom influence the development of democratic societies. Our economic involvement with foreign countries makes the world a safer place and reduces poverty in every country that can participates in the marketplace. As dreadful as conditions are in Africa and the Middle East are today, its likely that conditions in post WW2 Japan and Germany (the worlds 2nd and 3rd largest economies) would not be better if these places did not have free economies (relatively speaking).

No question that we should not buy goods that we're not confident in or attempt to compete with government subsidized industry, and its also true that we need to preserve strategically crucial industries for our own security. This is a large and complicated issue, but the legislation strikes a good balance between populism and free trade inasmuch as we are talking about US taxpayer money and a stimulus ostensibly intended to buoy the US economy. I can certainly respect that it is your (and my) money that we're talking about, but I do not agree that free trade is a joke.
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by Haze1953 May 26, 2009 10:54 AM EDT
Stahl sounds like a protectionist spokesperson for the Chinese.
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by Earthie48 May 26, 2009 9:26 AM EDT
Americans are STILL loosing their jobs by OVER HALF MILLION JOBS PER MONTH, now tell me, where is the PROTECTIONISM? I say Bullcrap!

If we continue to LOOSE jobs by the half million each month, where the heck will Americans have money to even buy the CHEAP TOXIC products China ships to our country?

America HAD Quality Control Standards, and the MAJOR reason Big Business wanted to do business off shore! Now, that the CEO's of Big Business, told China ANYTHING GOES, and shipped that crap back into America, hell has broken loose once again with Toxic Products, and we're wasting TIME and MONEY getting the Quality Controls back we once had!

I, for one am FED UP, with being AFRAID to buy almost anything today for FEAR of whats in the products we buy. EVERYTHING I pick up, I am SICK OF seeing MADE IN CHINA! The quality of the product SUCKS! It either doesn't last, or does not WORK!

PROTECTIONISM, I AM ALL FOR IT! Bring back our Manufacturing Plants, and QUALITY CONTROL LAWS!

The Bush Administration THREW ALL QUALITY CONTROL MEASURES out the window and ALLOWED Big Business and Big Oil to DESTROY and BANKRUPT our country!
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by rlp911 May 25, 2009 7:36 PM EDT
I agree with the CEO of NUCOR when he says that free trade is a joke. There IS no free trade and we should require "equitable" trade or fair trade. When foreign countries have access to our market and compete against American companys the foreign companys should be forced to manfacture their products under the same rules our companys have to in order for it to be fair trade. The concern for the environment and workers rights under the EPA, NLRB, FLSA, and the FLRA are considerations that should be taken into account as well as government subsidies BEFORE any "Free Trade Agreement" is signed into law. We can't compete with these foreign companys who pollute the enviroment and pay wages far below what is the law here! It is not protectionism to demand fair trade.
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