Is ‘Buy American’ a Slogan Worth Preserving?

Call it the Rubber-Chicken War—the looming trade dispute between the United States (which has announced punitive tariffs on imports of Chinese tires) and China (which is threatening retaliation against American poultry exports). Against the background of the G20 trade talks in Pittsburgh, that contretemps made this an auspicious time to examine the age-old question of protectionism. Last week, beginning the fourth season of public debates sponsored by Intelligence Squared US, six panelists discussed the proposition that "Buy American/Hire American policies will backfire." http://www.newsweek.com/id/216141

In a previous post I mentioned that the ongoing building of the new San Francisco Bay Bridge expansion is now going to be extended beyond its original completion date because of steel deliveries from China. The delivery of steel from China will be delayed because of problems with the welds; in my previous post why are we buying steel from China when it should be cheaper to buy the steel from our own steel manufacturing base. The article below will explain why we had to buy steel from China, but first read the Newsweek article to understand this problem.

One of the best-kept secrets in the federal government is how much the steel industry is subsidized. Hopefully, this situation will change. A recent study entitled Paying the Price for Big Steel, released by the American Institute for International Steel, provides a compelling case for the immediate elimination of restrictive trade restraints on steel imports and subsidies for domestic steel producers. The 107th Congress should take a closer look at subsidies and trade restraints granted to the large, integrated U.S. steel companies. http://www.cagw.org/site/PageServer?pagename=policy_Steel_Subsidies

Even though this article was written some time ago in the first few years of the Bush Administration but it still continues into the Obama Administration and is relevant today. The domestic steel manufacturing base receive over a billion dollars in government subsidies that were supposed to make them more competitive, but instead they just pocket the money therefore making it more expensive to produce U.S. steel therefore it's cheaper to purchuse steel from our foreign competitors. U.S. Steel is better quality then its Chinese competitors then why was the U.S. steel bid 23% higher than its Chinese competitors? The costs was more than $400 million dollars, and because of the expensive U.S. steel costs, we have to wait until the problem of the Chinese steel welds are fixed. These are questions that need to be looked into or do we have to wait until the Steel Industry goes bankrupt and expect a bailout from you guess the U.S. taxpayer. If the Steel industry wants to compete in the global economy maybe they should modernize their plants and improve global productivity and efficiency standards. The American taxpayers keep paying a high price to protect antiquated industries that like the auto companies refuse to modernize their factories and compete against its foreign rivals. In this case why are we being fleeced while corporations get richer at taxpayer expense?