Trade Wars Brewing In Economic Malaise

16. May 2009 by Dan Walkow, CFA, CMT.

Is this what the first trade war of the global economic crisis looks like?

Ordered by Congress to “buy American” when spending money from the $787 billion stimulus package, the town of Peru, Ind., stunned its Canadian supplier by rejecting sewage pumps made outside of Toronto. After a Navy official spotted Canadian pipe fittings in a construction project at Camp Pendleton, Calif., they were hauled out of the ground and replaced with American versions. In recent weeks, other Canadian manufacturers doing business with U.S. state and local governments say they have been besieged with requests to sign affidavits pledging that they will only supply materials made in the USA. See full article at the Washington Post.

This tit fot tat mini-trade war between the US and Canada is alarming and if not arrested soon could morph into a serious issue for Canada. Close to 80% of Canadian exports go to the US who is Canada’s major trading partner. Where is NAFTA?

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