Trade, “Buy American,” and the Journal

Trade reporting has picked up in the last couple of days after the Obama administration slapped a fat tariff on cheap Chinese tires it said were flooding the U.S.

That’s sparked a lot of jawing about a potential trade war in the press, which somehow usually forgets that our trading partners need us a lot more than we need them.

See, for instance, The Wall Street Journal this morning, which writes about Canada rather than China, saying that the “Buy American” provision of the stimulus bill—you know, the one that says the hundreds of billions of dollars in U.S. taxpayer money spent to stimulate the U.S. economy actually should be used to stimulate the U.S. economy—has had some unintended consequences for some U.S. companies.

Namely: A Wisconsin sewage-equipment manufacturer and corporate goliath General Electric, the only two American companies listed here.

The Wisconsin company, Aquarius Technologies, the paper’s lead anecdote, has had some unspecified supplier problems. But the paper wants you to know it could lose a bunch of its business if:

But the bill’s Buy American provisions — meant to give U.S. companies a leg up on foreign competition — are causing Aquarius and other U.S. companies a lot of grief with both suppliers and clients in Canada.

Now that grief has boiled over into a major diplomatic row with the largest U.S. trading partner. Canadian communities angered by perceived American chauvinism have started a Buy Canadian campaign to exclude U.S. bidders from municipal contracts.

“If that sticks, well, there goes 25% of my business,” said Mr. Pokorsky. “To me, Ontario may as well be Indiana.”

Halton Hills, a town of 50,000 people about 25 miles west of Toronto, is one of about a dozen Canadian communities forging ahead with plans to amend their procurement policies to freeze out American companies. “We won’t be taking any products from any country that is discriminating against us,” said Mayor Rick Bonnette.

If you’re not reading closely, you’d think that Aquarius lost some sewage business with Halton Hills. Maybe it did, or maybe the Journal just tossed the town in there because the mayor gave good quote. We’re not told.

It’s obviously good to note problems with the “Buy American” program—like the fact that just $77 million of the $5.9 billion in stimulus funds slated for wastewater treatment has been spent, “in part” (whatever that means) because of “Buy American.” But as you can see from the paper’s next sentence, that doesn’t seem to have held up the rest of the stimulus, which was intended to be parceled out over a couple or three years:

Overall, the government has either spent or committed about $210 billion in stimulus finds, leaving $370 billion still to be doled out.

And the Journal slides this in grudgingly down low, emphasizing the negative:

Trojan Technologies Inc. of Ontario, North America’s dominant maker of ultraviolet disinfection equipment for treating sewage, is a key supplier to Aquarius and other companies.

Because of the Buy American provisions, Trojan has had to shift production to a plant in Valencia, Calif., a move that has resulted in delays and additional costs being passed on to customers, said Trojan executive Christian Williamson.

But the larger problem with this story, and with the Halton Hills anecdote specifically, is that the Journal doesn’t acknowledge the elephant in the room—that our neighbors to the north run a $78 billion trade surplus with us. That $78 billion means a heckuva lot more to their $1.3 trillion economy than it does to our $14.3 trillion one.

I’m just sayin’.

Has America ever needed a media watchdog more than now? Help us by joining CJR today.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.