President Biden will make changes to the Buy American trade rules for government procurement on Friday, increasing domestic content by as much as 75% in 7 years. The announcement comes just days after Biden said “Instead of relying on foreign supply chains, let’s make it in America” during his State of the Union Address.
The latest rule change sends the domestic requirement from 55% to 60%, possibly next year, with an increase to 65% by 2024 and 75% by 2029, the White House said.
A senior administration official told the WSJ on Friday that the increase means taxpayer dollars used in government contracts help to build local supply chains. Importers criticized the rule changes back when they were first announced in July, using the usual argument that it will be “inefficient” and “too costly”.
But if Washington is at all serious about re-industrializing large swaths of the country, from upstate New York to the old tool towns of Chicago and Pennsylvania, then some companies will have to step out of their status quo bubble for a little while. It’s been at least 20 years that companies have benefited from offshoring to the detriment of the American worker. This is especially true in manufacturing employment.
And while some in Washington think tank club will argue that American companies do not manufacture, and don’t want not manufacture, Biden spent part of his speech on Tuesday praising investments from Ford and Detroit. Siemens USA is also investing in U.S. manufacturing – in this case EV charging station infrastructure – and Intel is investing in another chip-making facility.
Biden’s Buy American changes could be bigger. It does not make any adjustments to the Government Procurement Agreement of the World Trade Organization, of which more than 20 countries plus the entirety of the European Union are part. GPA signatories can bid on U.S. government contracts as if they were local businesses. Hong Kong is a member of the GPA.
On April 20, 2021, the Biden Administration withdrew a proposal by the previous government to remove essential drugs and medical devices from coverage under GPA. With Trump’s Buy American Executive Order No. 13944 withdrawn, the U.S. government remains free to buy U.S.-made or foreign-made drugs and medical devices, as permitted under the Trade Agreements Act.
New changes to the Buy American requirements do not change that for essential medicines.
The updates to the 1933 Buy American Act will be introduced with great fanfare by the Biden administration and is a move in the right direction.
“The Biden administration’s failure to apply Buy American rules even to critical medicines is emblematic of the attitude of the Biden administration toward trade and jobs,” noted Jim Stuber, co-chair of CPA’s Buy American Committee. “Gutting the solar panel tariffs (on February 4) is another recent example. I hope these new Buy American rules can be a first step toward seriously bringing jobs home to Americans.”