The 7 billion stimulus plan that U.S. President Barack Obama signed on February 17 contained a provision that was hardly unexpected but nevertheless worrisome to proponents of global free trade. It was a requirement that projects funded by the bill buy American-made goods whenever possible. When governments around the world spend vast sums to stimulate their economies, it seems only reasonable for each to invest at home. After all — or so the argument goes — why should American taxpayers pay for steel from Canada when U.S. steelmakers are struggling?

Do Tariffs Work?

Economists and political leaders in the U.S., Europe and elsewhere worry that this simple logic is spurring protectionist sentiment around the world, threatening free-trade principles that are crucial to any global economic recovery.…