The late Prime Minister Pierre Trudeau once said that Canada's relationship with the United States is like that of a mouse in bed with an elephant: "No matter how friendly and even-tempered the beast, one is affected by every twitch and grunt."

So when congressional Democrats included a "Buy America" provision in the $787-billion infrastructure stimulus package, it set off alarm bells north of the border. Never mind that the U.S. and Canadian steel industries are riveted together by an integrated supply chain and cross-border ownership, the ruling Conservative Party of Canada believed that the principles of free trade were in jeopardy of being breached and wouldn't have any part of it. With Canada exporting more than $7 billion in iron and steel to the United States annually, this was no small matter.

President Obama quickly doused the fire by pledging that "Buy America" would not violate trade pacts. Imports would be allowed from the 38 nations with which the...