The prospect of a trade war between the US and Europe is looming after “Buy American” provisions were added to President Barack Obama’s $820 billion (£573 billion) stimulus package.
President Barack Obama’s $820 billion stimulus package was passed by the House of Representatives Photo: AP
The EU trade commissioner vowed to fight back after the bill passed in the House of Representatives late on Wednesday included a ban on most purchases of foreign steel and iron used in infrastructure projects.
The Senate’s version of the legislation, which will be debated early next week, goes even further, requiring that any projects related to the stimulus use only American-made equipment and goods.
The inclusion of protectionist measures has quickly raised hackles in Europe.
Catherine Ashton, the EU trade commissioner, said: “We are looking at the situation. The one thing we can be absolutely certain about, is if a bill is passed which prohibits the sale or purchase of European goods on American territory, that is something we will not stand idly by and ignore.”
Despite the parlous state of the US economy, some major American firms, including General Electric, are also opposed to the Buy American stipulations, fearing reprisals from overseas and further damage to the global economy.