Biden Signs Buy American Order for Government Procurement
Order revises definition of U.S.-made products as president seeks to boost domestic manufacturing
WASHINGTON—President Biden signed an executive order Monday imposing tougher rules on government procurement practices to increase purchases of products made in the U.S., a step toward fulfilling his Buy American campaign pledge to strengthen domestic manufacturing.
The new policies will include tightening the government procurement rules to make it harder for federal agencies to purchase imported products, revising the definition of American-made products and raising local-content requirements. The executive order also aims to ensure that small and midsize businesses will have better access to information needed to bid for government contracts.
“Under the Build Back Better recovery plan, we will invest hundreds of billions dollars in buying American products and materials to modernize our infrastructure and our competitive strength will increase in a competitive world,” Mr. Biden said at a press conference.
Some economists and trade experts have questioned the impact of such policies, citing the small size of government procurement in the overall economy, and noted that risks might include higher prices and retaliation against U.S. exports.
While the impact might be small, the new order hints at the broad shape of Mr. Biden’s trade policy and its focus on American workers. It states that Mr. Biden is committed to working with partners and allies to modernize international trade rules, including those related to government procurement, “to make sure all countries can use their taxpayer dollars to spur investment in their own countries.”
James Wyner, chief executive of advanced-fabrics maker Shawmut Corp. based in West Bridgewater, Mass., said he is hopeful that the renewed focus on Buy American rules will encourage the federal government to procure more of the medical gowns his company started making during the pandemic.
More than 100 workers are producing gowns for the Defense Logistics Agency under a contract that is set to finish in February. Mr. Wyner said politicians and the public have realized the dangers of relying on foreign suppliers for critical goods and he wants congress to extend Buy American requirements to more types of products.
“Both economically and politically this can be made to work,” he said.
Mr. Biden’s Buy American initiative has similarities to former President Donald Trump’s domestic-preference effort, which was part of America First policy that featured tariff wars with China and other trading partners.
The new Biden policy will affect federal agencies’ direct purchase contracts for goods and services, which totaled $586 billion in fiscal 2019, according to the Government Accountability Office. The GAO said foreign products accounted for less than 5% of direct federal procurement but has warned that the actual amount might be larger owing to system errors and limitations.
While direct government procurement represents a small sliver of the U.S. economy, the new policy’s impact on domestic companies and jobs could be significant if the Buy American standards are applied to the massive spending plans on infrastructure and new energy pursued by the new administration.
“This executive order will close loopholes that allow agencies to sidestep Buy American requirements and increase the thresholds for domestic content,” Richard Trumka, president of the AFL-CIO, said in a statement. “This order is a good first step in revitalizing U.S. manufacturing.”
Groups representing large exporters cautioned against protectionist policies, such as weakening of the government procurement agreement under the World Trade Organization, that could prompt other nations to shut their doors on U.S. companies in return.