Organized labor exacts its pound of flesh.

I doubt that this clause will cause a global trade war, or that it will have much benefit, either. Since the US is a net importer from most of the non-exempt countries, the US has less to lose. For example, if China stopped all imports of US goods, it would have an effect on employment and gdp. If the US stopped all imports of goods from China, the Chinese economy would collapse within days. Also, most exports to China from the US are high-tech goods, notably machine tools and sophisticated computers, unavailable elsewhere; Chinese exports to the US are almost entirely commodity goods, which other countries could quickly provide, and which the US has the capacity to build in country. For one example: China cannot produce a laser-guided milling machine of sufficient tolerance to build critical aerospace components, and the few other countries that can would be unlikely to sell to them. The US, on the other hand, can produce clothing, footwear and mainstream electronics, or buy from other Asian countries. The US has such a large trade deficit that it is difficult to inflict damage on the US with trade restrictions that would not redound with more damage on the partner country. There seems to be no great harm to this clause, though I cannot see how it will provide more than negligible benefit to, for example, the steel industry. In the end, I think this is much ado about nothing.

Chris

More of the left ideology which hasn't a clue when it comes to history.

As you point out, protectionism not only failed in the thirties, but caused the Great Depression to be deeper and more prolonged.

Same thing goes for raising taxes in a recession as is being attempted here in California. Heaping insult to injury. Why do the leftist scorn the taxpayer so?

Nicholi said "Politicians talk about a trade deficit like it's a bad thing. It just means we're importing more than we're exporting. That's a great thing because people are getting better products or getting the same products at a better price than equivalent items made domestically. That means increased buying power for everyone.' Unfortunately, a trade deficit means buying power is being drained away. While Americans may be able to buy things at a lower price, because less is being produced in the US, workers have lower incomes. Taken to the extreme, if we imported everything, even if costs were much lower, no one would have any income to buy. Henry Ford, not exactly a leftist-socialist-lover of labor, paid his workers a much higher than average wage because, according to Ford, it was important "that every worker (at Ford) could afford to buy a Ford automobile." If there were no trade ramifications, it would be better to pay slightly more for US steel than imported, because that money would remain in the US economy (workers would buy things from local stores, purchase local services, government would increase tax revenue, etc). Look at what Ohio's steel-industry region looks like. No matter how cheap imports are, people there have no money to buy. Trade deficits are, except in unusual circumstances, damaging in both medium and long term.

Chris

I understand that obviously other countries want us to purchase products from them. But as we've seen from the plethora of products recalled that in China, I don't think buying everything from other countries at the cheapest possible price is a great idea.

In general, I think it's fine to buy products from other countries as long as they are absolutely safe and the working conditions are ethical. But I think that in regards to this specific plan, adding a Buy American clause is perfectly fine. If manufacturers receive "bail out money" or "stimulus checks" or whatever that's funded by taxpayer money, then they should be expected to use this money to support the American economy in all parts of the manufacturing process.

If the Obama administration suddenly called a press conference and ordered a ban on all imports, then yes, that would be a bad idea. But saying, "Here's some money and we strongly encourage you to use on products made in America," is just fine in my (non-economist) opinion.

As for whether it will do any good or if the whole world will completely collapse the day Americans reduce the amount of cheap junk imported from China...don't know but obviously I hope not.

Xin, it's a good question. I don't care where a product is made, as long as it fits my needs and is of good quality. I don't really care where it's made. We're all people, we all have the same desires... if we can get past this petty 'U.S' vs. everyone else I think we would be better off.

We are no longer separate nations, we are one planet.

-Nate

This is really not a big deal. It is only tied to the spending projects not all consumption of the country. If China is nervous maybe they should consider cleaning up their act. People are reluctant about goods from China due to lax safety standards, poor conditions for the workers and the trade deficit.

International trade is not a bad thing but it does need some oversight to make sure things are not getting out of hand. It is also time to set some world wide standards regarding labor and product safety. US companies did not go overseas because they were benevolent and wanted to help people in that other country. They did it because it was a situation they could exploit for profit.

I think it's amazing to see how people, in particular politicians, fail to understand the country in which they represent. America, and what made it great was founded on trade. Trade that could be done freely and openly without government intervention.

For those who remember their U.S. History it was trade regulations and tariffs imposed by the British that brought about the Revolutionary War. And rightly so. After winning the war, it was the open use of trade between other countries that made the U.S. the superpower it is today. The minute we stop open trade is the minute we can kiss our 'superpower' status goodbye.

While I can sympathize with the politicians and others who think that we need to limit the money from the stimulus to U.S. companies, I can't support it. The truth is, there are better companies abroad which can probably do the work better and cheaper. And while domestic businesses may not make the grade, losing to people overseas is a great motivator to improve. Taking away that motivation to lose is depriving American companies of ever being competitive, stimulus money or not.

Good businesses last and poor ones die. That's how it's supposed to work. We'll all be better off if we do. If not, we'll all end up working for second rate companies.

A trade war might be the first war since WWII that the US can win.

Well... these other countries have trade barriers too. How about they lower their trade barriers too?

Also, how much purchasing can be done with the stim money?
Doesn't a lot go toward labor?

(As far as companies leaving - they have already left. That's why so many things are imports. How are you supposed to buy American when America makes less stuff than the world?)

It is presumptuous to believe that the Chinese economy would collapse if the U.S. stopped importing.

Yes China does produce goods that any other nation can, however that does not mean that China will descend into chaos if trade with America stops.

The Chinese are not importing all that much from the U.S. In total they imported $71,457,000,000 dollars worth of goods in 2008 while we imported $337,789,800,000 dollars from them.

Yes the chinese are primarily importing high tech equipment that is being installed in factories that turn around and produce those shoes and clothes that we buy from them. However in the $71 billion of goods they import is the luxury items for the rich such as red wine from California and Cadillacs.

Do the Chinese need Cadillacs, I mean if they drove Corollas would more Chinese die every year, would they be less healthy, would less work get done? No in fact life would be better, they would spend less on gas and it would cut pollution.

At the same time does America really need as many shoes, toys, or clothes that are sold every year? Seriously some people buy 4 pairs of clothes of every other month, it is waste soo much damn waste.

If the Chinese can no longer work as virtual slaves for their aristocrats that ship off $250 billion worth of product and receive nothing in return but I Owe Yous how can their standard of living be diminished?

The whole economic system exists to benefit aristocrats in the Third World, and perhaps Management in Corporate America, Certainly some Americans benefit from low prices, but ultimately America loses from Free Trade as it destroys jobs in the country and has resulted in us striping capacity.

As a Canadian, I've got to say I'm a bit annoyed by the attitude that America's trading partners that matter are all 3rd world countries with crappy labour standards. We're losing jobs to AMERICA because it's got lots of stimulus money to bribe companies to keep jobs there, and crappy labour standards in a lot of areas.

The least the US could do is keep buying our lumber, steel, coal and agricultural products which are the lifeblood of the Canadian economy.