"Buy american" and Stimulus bill

The US Congress has recently passed a law, named “American Recovery and Reinvestment Act”, (so-called “Stimulus Bill”), that introduces a huge tax intervention based on a mix of public expenditure and tax reduction measures for a total spending of $ 787 billions. Section 1605 of this law sets a particular tie to the use of these funds, that can be used only for projects of construction, alteration, maintenance, or repair of a public building or for other public works, where iron, steel, and manufactured goods exclusively produced in the United States are used. There are anyway some limited exceptions to this rule, such as in cases where its application is inconsistent with the public interest; or where iron, steel, and the relevant manufactured goods are not produced in the United States in sufficient and reasonably available quantities and are of a satisfactory quality; or in the case where the use of iron, steel, and manufactured goods produced in the United States would increase the cost of the overall project by more than 25 percent.

This provision has proven to be controversial also in the US, where many companies fear that their trading partners abroad will retaliate with similar “buy domestic” provisions, so thwarting their investiments in Europe and Asia. To avoid this effect, Section 1605 introduces to the subsection d) a "safeguard" clause establishing that the "buy american" provisions shall be applied in a manner consistent with U.S. international trade obligations.