Barack Obama to dilute 'Buy American' plan after Europe threatens US with trade war - by Tim Shipman and Philip Sherwell
The White House has promised to review the protectionist proposals, passed last week by Democratic allies in the House of Representatives, which would ban the use of non-American steel in the $800 billion of construction projects. Obama officials are under pressure from what European diplomats in Washington describe as a discreet but outspoken campaign of "quiet fury" from America's closest allies. They regard the move as a provocative shift away from free trade and towards economic populism at a time of turmoil. In a bid to win further favor with impoverished voters, Mr Obama announced yesterday that his Treasury team will launch a dramatic overhaul of the existing bank bailout programme this week, designed to rein in executive bonuses and ensure banks do more to help mortgage holders. In his weekly radio address, Mr Obama promised to "help lower mortgage costs" and repeated his moral denunciation of corporate executives who ask for taxpayers money and then pay gigantic bonuses to their staff. "We learned this week that even as they petitioned for taxpayer assistance, Wall Street firms shamefully paid out nearly $20 billion in bonuses for 2008," Mr Obama said. "The American people will not excuse or tolerate such arrogance and greed."
Mr Obama also called for the stimulus package to be passed quickly. But the Buy America provisions in the plan are forcing him to choose between a showdown with Congress or a collision course with other Western governments that could end in a trade war.
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