China counterattacks with “Buy China” policy

If you ever wondered how trade wars start, pay attention. We are in the early stages of saber-rattling on trade and if some adult supervision does not come along, it could get much worse. Here’s how.

Politicians tries to curry favor with unions or the steel industry or the auto industry and they insert a “Buy American” clause into legislation. In this case, it was the American Recovery & Reinvestment Act of 2009, otherwise known as President Obama’s economic stimulus plan. Then, politicians in other countries get the same ‘bright’ idea and they insert protectionist trade policies into legislation over there as China is now doing. Rinse, repeat and escalate and before long you have a serious problem...