A coalition of leading American exporters, including Boeing, Caterpillar and General Electric, is trying to stop a “Buy America” clause being included in President Obama’s $825 billion stimulus package.
The American Steel First Act would ensure that only US-made steel was used in $64 billion of federally funded infrastructure projects.
The money, earmarked for roads, bridges and waterways, is aimed at kickstarting the economy, but the initiative by steelmakers, which secured support last week in the House of Representatives Appropriations Committee, is opposed by American exporters, who fear retaliation by foreign governments.
Their concern is given credence by the European Commission and by Eurofer, the association of European steelmakers, which said that it would urge the European Union to challenge the “Buy America” clause at the World Trade Organisation.
The head of the International Monetary Fund turned up the heat on China over its exchange rate policies on Monday, arguing that it was clear that the Chinese yuan was “significantly undervalued”.
Dominique Strauss-Kahn, the IMF’s managing director, said that it was in Beijing’s clear interest to allow the yuan to strengthen on foreign exchanges and insisted that the fund had been straightforward on the issue and had repeatedly spelled out this assessment.
Mr Strauss-Kahn’s intervention stepped up pressure on China over its currency only days after Tim Geithner, President Obama’s nominee as US Treasury Secretary, sent a tremor through markets as he signalled a potential shift to a harder line from Washington over the yuan.