What Does President Biden’s ‘Buy American’ Mean?

U.S. President Joe Biden signs an executive order as Vice President Kamala Harris and White House science adviser Eric Lander standby in the State Dining Room at the White House in Washington, U.S., January 27, 2021. REUTERS/Kevin Lamarque

In his first days, President Biden signed the Buy American Act (BAA) into law.

The new leader of the United States faces a rocky start to his presidency. It begins after chaos at the Capitol while the COVID-19 pandemic continues with seemingly no end.

The global contagion prompted the government to mandate a nationwide lockdown. Meant to safeguard public health, it caused massive unemployment and job closures.

In response, President Joe Biden signed an executive order regarding the Buy American Act. He hopes this would help struggling Americans and revive the nation’s economy.

However, what does Biden mean when he says “buy American”? Read further to learn its potential impact on the nation’s economy, foreign trade, and your daily life.

What is ‘Buy American’?

In 1933, President Hoover signed the Buy American Act. He wanted to help the economy by promoting federal procurement of more stuff manufactured in the United States.

These items “must be present in the United States in sufficient and reasonably available commercial quantities of a satisfactory quality.”

Furthermore, exceptions are applicable if the act goes against public interest or charges “unreasonable” prices.

What Will President Biden’s Executive Order Do?

Biden said the United States has “never fully lived up” to the “Buy American” provisions. This is the rationale behind his recent executive order.

This order intends to “close loopholes that allow companies to offshore production” despite the availability of domestic preferences.

The executive order mandates compliance with “Made In America Laws.”

This term applies to rules related to domestic materials and products. They particularly require or recommend buying said items. It also specified iron, steel, and manufactured goods from the United States.

Exceptions to Buy American requirements could be requested by filing a waiver. These will be monitored by the Made In America Office within the Office of Management and Budget.

This could promote domestic manufacturing, assist small US businesses, and curb unemployment. These were the original goals behind the Buy American Act, but Biden may finally reach them.

What Does That Mean for Americans?

You may have heard similar initiatives from Biden’s predecessor.

If you’ll remember, President Trump frequently promoted “America First” for domestic manufacturing and employment. He often said that he wanted to increase American jobs and support American workers.

The idea of “Buy American” is prevalent as around 75% of Americans support it. However, it seems less appealing as you get to the brass tacks.

If federal agencies limit government purchases to domestic sources, this shortens the list of potential suppliers. In turn, the move decreases competition and increases the costs of projects.

Consequently, the government would need more taxpayer dollars for funding. Once again, this could add more taxes for regular Americans.

In the end, the Buy American Act could end up hurting the businesses it wants to protect.

Ironically, this could disparage small US companies that rely on foreign trade. This would create new domestic supply chains that may drive them out with competitive prices.

The executive order could limit the number of projects that the federal government can afford. BAA requirements would increase the cost of public works so that fewer projects could commence.

Also, this could undermine Biden’s own pledge to provide environment-friendly public transportation. His new order makes green projects more expensive so that the government might take on fewer of them.

Why Does it Affect Canada?

The Buy American Act could ruin trade with allies, so the country may struggle to repair its global reputation.

The United States has depended on ally supply chains for its goods and services. Specifically, Canada is one of it’s largest trade partner.

Although, Canada expressed concern over Biden’s recent executive order. The Canadian Chamber of Commerce said it could make securing US government contracts more difficult.

Nonetheless, Canadian Deputy Prime Minister Chrystia Freeland assured that Canada could handle the new set of rules. Also, a White House statement confirmed that Biden would work with allies to update international trade rules.

Issues With The Buy American Act

There are noticeable problems with the BAA provisions.

It’s main issues are it’s vague terms and methods. These make it difficult to determine the success of the EO.

Biden’s new order wants to promote the consumption of products “made in the USA.” However, it did not say how this would be measured.

For example, how will the Buy American Act determine if materials come from the US? Will the federal government calculate domestic content, or will each state do it themselves?

The BAA requires a sufficient supply of domestic goods. They are also forbidden from having “unreasonable” prices, and they must only be used for “public interest.”

What if the country can’t create enough amounts of a product? What if some imported stuff serves the public interest? The BAA didn’t account for these possibilities.

Lastly, the EO didn’t mention tools and equipment used in manufacturing. Does this mean a company could make American products using foreign equipment?

As a result, this could negatively impact the domestic production of these items. In turn, US manufacturing workers could be left out by the Buy American Act.

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Summary

Biden issued a new executive order to help the American economy.

Under this new rule, federal agencies must require or recommend purchasing domestic goods. In turn, this could bolster American businesses and increase American jobs.

However, there are issues regarding how it would be implemented. There are circumstances that the executive order fails to consider.

Nevertheless, the Buy American Act could be modified eventually during Biden’s administration. It’s his first 100 days so that he may improve its provision in the future.

The US constitution is the foundation of the United States government. Yet, it has gone through several amendments that the country still follows until today.

Similarly, a president’s actions may adapt to serve a nation better. Ultimately, the success of a country’s leader is also the success of its people.

With further modifications, Biden’s Buy American Act may eventually be a success for America.