Trade War 2.0: How the Stimulus' "Buy American" Provisions Are Killing Jobs

Nick Gillespie | May 15, 2009

The Wash Post has a story on a new wave of protectionism that is built into stimulus spending:

The new buy American provisions, the company said, are being so broadly interpreted that Duferco Farrell is on the verge of shutting down. Part of an increasingly global supply chain that seeks efficiencies by spreading production among multiple nations, it manufactures coils at its Pennsylvania plant using imported steel slabs that are generally not sold commercially in the United States. The partially foreign production process means the company's coils do not fit the current definition of made in the USA—a designation that the stimulus law requires for thousands of public works projects across the nation.

In recent weeks, its largest client—a steel pipemaker located one mile down the road —notified Duferco Farrell that it would be canceling orders. Instead, the client is buying from companies with 100 percent U.S. production to meet the new stimulus regulations. Duferco has had to furlough 80 percent of its workforce.

"You need to tell me how inhibiting business between two companies located one mile apart is going to save American jobs," said Bob Miller, Duferco Farrell's executive vice president. "I've got 600 United Steel Workers out there who are going to lose their jobs because of this. And you tell me this is good for America?"

The Buy American provisions have already caused friction between the U.S. and Canada, as American buyers turn from Canuck suppliers, and vice versa.

More here.

Comments

|5.15.09 @ 1:11PM|#

Why stop at repeating FDR's failures when you can reprise Hoover's as well?

At least we don't have to worry about Mexican truck drivers delivering the stuff. Or American truck drivers delivering stuff south of the Rio Grande.

JB|5.15.09 @ 1:13PM|#

Congress and Obama are so stupid.

Argh, I hate those creatures.

Now if it was my company I would offer to bus my workers to DC and arm them appropriately.

|5.15.09 @ 1:24PM|#

I have a stimulus plan. Unilaterally lift most tariffs and cut taxation in half for the next year. Also, cut most if not all subsidies.

Let's see what happens.

|5.15.09 @ 1:24PM|#

"I've got 600 United Steel Workers out there who are going to lose their jobs because of this. And you tell me this is good for America?"

Ho ho, 600 people who will vote for me whatever I do to them! Hell, 600 people whose union dues are paying for ads and activism supporting me whatever I do to them!

kinnath|5.15.09 @ 1:53PM|#

The road to hell is paved with good intentions.

|5.15.09 @ 1:54PM|#

Save our jobs! Stop the trade! Build a wall in the south! Machine gun nests in the north! Let's all crawl in a hole and hide from the world!

|5.15.09 @ 1:57PM|#

And the net result is that the taxpayers end up getting less for their money, because US companies will charge higher prices for what they sell to the government. Just like military procurement.

|5.15.09 @ 1:59PM|#

If the Fiat 500 magically sprouts a "Dodge" badge, will it be eligible for the "cash for clunkers" credit?

|5.15.09 @ 1:59PM|#

Good intentions are one thing, but we've been saying that these measures will hurt us all for a long time now.

That said, I'm curious why Duferco Farrell can't get "Made In America" status but the competitor can (the article says the steal slabs are not sold commercially in the US). Anybody?

|5.15.09 @ 2:02PM|#

As our little buddy "chad" pointed out the other day, economic efficiency is bad, government mandated inefficiency is good.

|5.15.09 @ 2:10PM|#

As our little buddy "chad" pointed out the other day, economic efficiency is bad, government mandated inefficiency is good.

Exactly. If it takes 10,000 man-hours to build a road, instead of 5,000, you have to hire twice as many workers.

See, magic "job production".

Paul|5.15.09 @ 2:11PM|#

Send your complaints to WhiteHouse.gov C/O Barack Obama & Timothy Geithner. Make sure to CC Congressional Majority leadership.

|5.15.09 @ 2:20PM|#

Grr. It's a sunny Friday, I'm about to take a long weekend, and yet, retarded-ass protectionism can still ruin my mood. How staggeringly stupid do you have to be to think this is a good idea? Anti-trade is anti-prosperity, simple as that.

Neil|5.15.09 @ 2:29PM|#

Lamar: The Buy American provisions require that all iron, steel, and manufactured goods used in construction projects funded by the ARRA (aka the stimulus act) must be "produced in the United States". The article seems to imply that D-F is banned because the steel slabs are not sold commercially in the US.

However, the ARRA in fact allows a waiver for such commercially unavailable products. However, the ARRA requires the stimulus-funded company to apply for the waiver, not their supplier. Thus, D-F couldn't get a blanket "Made in America" status as far as I can tell. Instead, each of its stimulus funded customers would have to apply for a waiver. It may be that the referred-to "broad interpretation" companies are taking is that it isn't worth trying to get a waiver to use D-F products.

Paul|5.15.09 @ 2:31PM|#

Grr. It's a sunny Friday, I'm about to take a long weekend, and yet, retarded-ass protectionism can still ruin my mood.

Ahh, you live in Seattle, no? I'd like to point out that it's almost June, and we got 8" of snow in the Cascades a couple of days ago. CURSE YOU GLOBAL WARMING!!!!

Now back to your regularly scheduled thread.

Paul|5.15.09 @ 2:40PM|#

Oh, and as we were all mentioning in a previous thread, even with these layoffs, Barack Obama has successfully created or saved jobs.

|5.15.09 @ 2:57PM|#

# kinnath | May 15, 2009, 1:53pm | #
# The road to hell is paved with good intentions.

I would say, "The Road to Hell is Paved with 'Good' Interventions."

Paul|5.15.09 @ 2:59PM|#

I would say, "The Road to Hell is Paved with 'Good' Interventions."

Win.

|5.15.09 @ 3:10PM|#

Grr. It's a sunny Friday, I'm about to take a long weekend, and yet, retarded-ass protectionism can still ruin my mood. How staggeringly stupid do you have to be to think this is a good idea? Anti-trade is anti-prosperity, simple as that.

Every economist of substance asserts that trade is beneficial. We have historical data that definitely proves it. There is no disagreement on this subject... Yet we still have protectionist wackos all around us. Just the other day I saw a post in a libertarian mailing list castigating free trade and urging a return to economic nationalism. Gag.

creech|5.15.09 @ 3:18PM|#

These UAW workers helped President Obama win Pennsylvania. I'm sure they are now as happy as all the Caterpillar workers who lost their jobs when the Dems voted down the Colombia trade agreement and priced Caterpillar out of that market. Yellow dog Dems (and Repubs)will never learn.

IceTrey|5.15.09 @ 4:21PM|#

If the steel slabs aren't generally available then where are the new suppliers getting them?

T|5.15.09 @ 5:43PM|#

If the steel slabs aren't generally available then where are the new suppliers getting them?

US suppliers who give them steel slabs that are close, but not quite the same. We have the same issue. On paper, the US manufactured steel meets our material specifications. In practice, we get a worse product when we use US made steel. We could use the US stuff, but it doesn't work as well, so our customers would be paying more for a shittier product. I'm guessing D-F is in a similar situation.

alan|5.15.09 @ 6:08PM|#

It must be a misinterpertation of intent. The Obama Administration represents Science, Harmony, Understanding, and Enlightenment, surely not something barbaric and backwards as protectionism.