Buy American has created a trade chill

Another issue of the stimulus plan is that some US automotive makers have bought parts from Canada and have assembled cars sold in the US for quite some time. That trade relationship appears to be shaky according to Newsweek:

For months Canada's premiers, who are that country's equivalent of state governors, have spoken out forcefully against the Buy-American clause, which requires that stimulus-financed public works projects use American materials. But until now they have been unable to agree on reciprocity. Since most government procurement happens at the provincial and municipal levels, this lack of consensus has allowed Washington to easily deflect Ottawa's efforts to secure an exemption from its Buy-American position.

Failure to make a deal on procurement has already cost Canadian companies billions of dollars, and spread pain far beyond the stimulus business. "Buy American has created a trade chill," says Jayson Myers, president of Canadian Manufacturers & Exporters, the country's largest trade and industry association, noting some U.S. companies are dropping Canadian suppliers to avoid filing waivers that prove they are playing by the new rules.

Last year Canada exported $4 billion worth of pipes, pumps and filters used in U.S. municipal water systems. This year a big chunk of that business is at risk of being lost, says Myers. Further, with tightly integrated supply chains that cross borders, any impediment to free trade is likely to do more harm than good to the U.S.-Canada partnership. "Millions of jobs are at stake on both sides of the border," says B.C. Premier Campbell.

I wonder what will happen if Canada or any other nation for that matter decides that they want to add a surcharge to oil they sell us, or decide to not sell us oil, things could get interesting...