What, exactly, did the US expect to happen.  As we all know, an integral part of the American Recovery and Reinvestment Act of 2009 was the “Buy American” provision.  This clause stated that, where doing so did not increase the cost by over 25%, any projects that utilized ARRA funds were to be constructed of American made materials.  While the outrage from China drew the most press, other countries were also voicing their disgust at the protectionist efforts.  Others discounted the Buy American clause as nothing more than a nuisance.  However, we have already seen some very real consequences of this “nuisance”.  There is one example of a project where the sewer pipes were American made, but he joint pieces were Canadian.  Every bit of pipe that had been laid had to be ripped up and redone at the governments expense.

Now, China comes out today and says that all of their projects completed under their $585 billion stimulus plan must utilize Chinese raw goods, where possible.  This has again sparked shouts of anger.  But this time it is the US that’s angry.  Although they have enacted the very same regulations domestically, several US groups are demanding that China remove these isolationist requirements.

Well, I’m not sure exactly what the US groups expected.  When we take the lead and implement it here, we can’t be too upset when it is implemented elsewhere.  I think we are seeing the beginnings of a significant trade war with China.  (Keep in mind we are already fighting the beginning stages of one with Mexico).  We may end up on-shoring our manufacturing not out of choice, but because we have no other options.