Business groups, trade unions and the US's trading partners are fighting a tug-of-war over “Buy American” rules as the Obama administration ponders whether to toughen up or neuter the controversial provisions.

The measures, which were in the $787bn US stimulus bill, require any project funded with stimulus money to use only US-made steel, iron and manufactured goods. As the money filters out, Buy American requirements are rippling through the private sector, maiming some US companies that cannot comply with them and enraging foreign ones that are altogether excluded.

In response, the US Chamber of Commerce has launched a lobbying blitz to persuade the administration to soften the provisions. Canada wants to be exempted. But unions and many manufacturers want to see Buy America beefed up instead.