U.S. Democrats in Congress added a “Buy American” provision to the fiscal stimulus bill early this year. It was a political tool to send a message to their fellow Americans that Congress is protecting American jobs.

Canadians weren't happy with the provision and some small towns, such as Halton Hills,  tried to retaliate in a typical David versus Goliath trade war.  The debate has come back to the surface this week with Prime Minister Harper making a trip to Washington to meet with top Democratic leaders in the Senate and House of Representatives to protest 'Buy American' provisions that have strained our relationship with our largest trading partner.

But, it seems the United States has bigger trade disputes to worry about. China is retaliating today after President Barack Obama imposed a new 35% duty on Chinese tire imports late Friday. The two largest economies in the world are now going tit for tat in what some are calling a full blown trade war.

 Take a look at two good articles on the U.S. trade war with China here and here. 

Also, take a look at our "Protectionism Returns" program from June 5, 2009 to get an idea of how important free trade is or isn't during an economic downturn.