In a bid to protect a country’s economy, along with subsequent exchange traded funds (ETFs), the United States Congress has included “buy American” provisions into the stimulus package, which has put the international community on edge.

A Potential Trade War? President Barack Obama has already stated he was not pleased with the world trading system and how it drains jobs out of America, reports Irwin Stelzer for Times Online. Now he wants to avoid anything that would “signal protectionism,” which would instigate a trade war.

Pros and Cons. The proponents of free trade have cited the benefits of comparative advantage and how our resources can be better allocated. This leads to the opponents’ view that prohibitions on the free movement of goods and services will be imposed by other nations.

Other Regions Do It. The European Union restricts U.S. chicken and beef imports. Russia confiscates inflows of foreign capital and cooperates with OPEC to restrict outflows. China’s currency is manipulated in a way as to keep its value down and to allow China’s exports flowing uninterrupted.

Helping Our Own. There is a growing need to compensate the workers who have lost their jobs to outsourcing. According to the Obama team, programs in place are not providing the necessary relief and tax laws are favoring overseas investments. Protectionist-leaning legislators and their trade-union puppet masters need to be persuaded into acknowledging the necessity of bringing China into the international trading system as a fair partner.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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