Biden turns to ‘Buy American’ Law to Aid US Manufacturing

Order revises definition of U.S.-made products as president seeks to boost domestic manufacturing.

President Joe Biden will sign an executive order Monday to tighten “Buy American” rules to boost federal purchases of U.S.-made goods as part of his campaign pledge to invest in the country’s manufacturing industry.

An administration official said in a Sunday press call that the executive order is part of Biden’s Build Back Better campaign platform “to address the structural challenges to our economy that have existed before the COVID crisis” and reflects the president’s view that “making things in America is core to our economic strategy.”

“The goal is to make sure that companies can’t undermine or get around the purpose of the made America rules by importing largely foreign-made products and making modest changes or tweaks on shore that add little value for American workers or American industry, don’t actually utilize America’s manufacturing capabilities,” the official said.

Members of Congress, U.S. industries, unions and labor advocates have called for Biden to make significant changes to the Buy American Act, which Congress passed during the Great Depression.

In a Jan. 22 letter, Sen. Tammy Baldwin, D-Wis., called on Biden to take several steps such as cracking down on waivers or exemptions that federal agencies receive under the law.

“I urge you to use your authority to narrow the application of waivers granted for domestic content preferences throughout the federal government. This includes Buy America waivers at the Department of Transportation for iron, steel, and manufactured goods as well as broader waivers granted to the Buy American Act,” Baldwin wrote. She said the law also is weakened by a trade agreement law that allows companies from 60 countries to bid for federal contracts.

The Biden emphasis on Buy American as a tool for boosting U.S. manufacturing is similar to former President Donald Trump’s populist focus on manufacturing as a key U.S. economic component and a source of well-paying jobs. Trump also issued executive orders to prod the federal government to increase purchases and use of U.S. goods.

Trump’s most recent Buy American executive order was issued in July 2019 and the Federal Acquisition Regulation Council issued a final rule on Jan. 19, 2021, to implement the order. The council proposed changing the threshold for qualifying domestic content from 50 percent of the cost of an end product to 55 percent of the cost. It also raised the domestic content for iron and steel end products to 95 percent.

But a Biden official said the Biden approach differed from Trump because it is focused on results.

“The former administration spent a lot of time talking about it. What is included in this order . . . is a clear directive with clear direction and clear time-limited windows to deliver on updating domestic content, the definitions, increasing the domestic content requirements and a process to reduce any unnecessary waivers that will change how Buy American operates in this country,” an administration official said.
New oversight position

The federal government spends $600 billion a year on purchases and Biden’s executive order will move oversight of implementing new rules on federal purchases to a newly created position, director of Made-in-America, at the Office of Management and Budget. A fact sheet indicated the order also set more stringent domestic preference rules for federal grants and other federal assistance.

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