The 2009 stimulus program says anyone who accepts stimulus funds has to buy American made steel. A 60 Minutes piece (http://www.cbsnews.com/video/watch/?id=4803915n) stopped short of identifying the real problem with “Free Trade and Buy American”
A Wall Street Journal article I found easily on MotorTrend.com is closer to the point than 60 Minutes.
Since 2001, the Japanese government has intervened repeatedly in currency markets to artificially devalue the yen by upward of 30%. As a result, Toyota and the other Japanese automakers receive a $4,000 to $14,000 subsidy on every vehicle they export to the U.S. Japan’s currency manipulation is fueling the market share gains of Toyota, Honda and Nissan in the U.S. and putting downward pressure on UAW wages and benefits.”
The #1 problem with all American industries is “Free Trade”. The Government of the United States , specially the Department of Congress, sets taxes or tariffs on foreign made products. These taxes are collected when the product reaches U.S. shores. The same is true of American products shipped to foreign Countries.
As is explained in the Wall Street Journal story, any Government can control the value of their currency to inflate/deflate the cost of their products in foreign markets. But the other half of the story is Government subsidies. For example, in Japan, the Government provides billions of dollars to their auto industry to cover costs like research and development for which American companies have to pay. Every company in the U.S. has to pay for health and retirement benefits. In other Countries, the Government pays for these.
Fair Trade cannot be confused with Free Trade. The U.S. Government must tax foreign products based on costs which are subsidized. In the Toyota example above, $4,000 – $14,000 must be added via a tax/tariff on every imported Toyota. The same holds true on steel or toys from China. The second issue with Free Trade is the quota system. Many American products are either not allowed or only certain alootments are allowed in foreign Countries. This must be a 1-1 ration on all products.
Buy American is a great concept that has been confused by the U.S. Government. I have no problem supporting American Companies and when the taxes, tariffs and import quotas are equalized, American industry will return stronger and more valuable than ever.
Walmart may have a hard time buying from American companies but they sure make a lot selling to Americans.