‘Buy American’ promise has gone nowhere
Despite Trump’s vows to bolster domestic spending to shore up the economy, almost nothing has changed.
But despite repeated vows to act and the unveiling of initiatives, almost nothing has changed. Even the federal government, which spends billions of dollars buying goods as diverse as meat, salad greens, medical equipment and jet fighters, has not increased the share of what it spends at home versus what it buys overseas.
As Scott Paul, president of the Alliance for American Manufacturing, put it, “For a president who almost every day on the campaign trail said, ‘Buy American and hire American,’ he has actually done very little to move the ball forward on that.”
The alliance is an advocacy group that broadly supports the Buy American concept and has backed some of Trump’s policies in that area.
“There’s a lot of pomp and circumstances, but when it comes to building out rules and making sure it comes together, it just isn’t quite there yet,” said Roy Houseman, legislative director of the United Steelworkers union, which has been a staunch supporter of Buy American.
One reason for Trump’s lack of progress has been his tendency to announce initiatives but to then move on to other subjects with little or no follow-through.
Shortly after taking office in 2017, for example, Trump seized on a Great Depression-era procurement law, the Buy American Act, which he said would be used to strengthen rules requiring federal agencies to purchase domestically made goods whenever possible.
He issued the first of a series of executive orders that included requiring federal agencies to produce annual reports detailing their purchasing practices. Three years later, it appears that no such reports have been produced.
Administration officials did not respond to requests for the reports, and the White House provided just one set of data: Direct federal procurement of foreign-made products in fiscal 2019 amounted to $7.8 billion, or 3.6% of the total. That’s compared with $6 billion, or 3.5% of the total, in fiscal 2016, the last year of the Obama administration, said Peter Navarro, Trump’s manufacturing and trade advisor.
Nor has the White House promulgated new rules limiting the current broad exceptions to Buy American policies, including waivers for dozens of trading nations.
“To me, the fact that past Trump Buy American orders have included explicit language that guts their ostensible intent by prioritizing trade-pact bans on Buy American underscores both that Trump has no interest in real change, but rather exploits Buy American proclamations for political purposes,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.
Navarro blamed the lack of progress on “bureaucratic inertia” and on the fact that some products, such as electronic components, are not made in America, or at least not in sufficient quantity or quality to meet government needs.
Trump’s latest Buy American order, requiring critical drugs and medical supplies to be sourced domestically, was signed Aug. 6 — several months after the COVID-19 pandemic exposed shortfalls of ventilators and other personal protective equipment. For years, the U.S. has depended on imports of face masks and hospital gowns, among other gear, which are produced largely in China.
Navarro, a former UC Irvine business professor and noted China hawk, said it took time to prepare the complicated directive, which asks a lot from domestic manufacturers and the pharmaceutical industry, as well as government agencies such as the Food and Drug Administration and the Office of the U.S. Trade Representative.
Democratic presidential candidate Joe Biden laid out a similar plan in July to secure domestic production of critical medicines, hospital equipment and protective equipment. He also has a plan to bring home jobs and manufacturing, including the investment of $400 billion in domestic procurement by the government and rewriting rules that allow many foreign companies to compete for U.S. contracts as though they were American firms.
Trump’s Buy American promise has also been hampered by opposition from inside his administration.
Infighting over the program reflects the larger division inside the administration over basic strategy on trade and the economy.
Navarro and other hard-liners have pushed for protectionist policies, including the trade war and tariffs directed at China, and a go-it-alone break with historical U.S. allies in Europe and Asia. More orthodox GOP conservatives see that as a shotgun approach to the global economy that will hurt the United States in the long run and gain little in the short term.
Trump himself has waffled, at times acting on protectionist instincts and at other times pulling back on policies that could dampen Wall Street.
Large business groups, including the U.S. Chamber of Commerce, have objected to an expansion of Buy American policies, arguing that it would burden U.S. companies and ultimately lead to higher prices for consumers. The oil and gas lobby pushed back against Trump’s promise to impose the approach on energy projects.
“I think it was back to the first week of the Trump administration when he specifically said, ‘We’re going to ensure that energy pipelines are made in America,’ ” said Paul at the manufacturing alliance. “He put together this presidential memo, and that’s literally the last we heard of it. It never materialized.”
Public opinion polls show strong support for the idea of Buy American, and there is a solid bipartisan consensus in Congress for the approach, including among House Democrats. But Trump’s heavy-handed and often indiscriminate use of tariffs has hurt many domestic manufacturers and the investment climate overall, constraining capital spending and industrial jobs.
Some provisions in Trump’s big corporate tax cuts in 2017 actually provided an incentive for American businesses to increase their offshore investments, researchers said.
The upshot is that U.S. manufacturing, ostensibly a key beneficiary of Buy American, has not done well. Factory employment grew by about 500,000 in the first two years of Trump’s presidency but was flat in 2019 and by some measures fell into recession even before the pandemic.
Separate data from private sources suggest a similar trend. The number of offshore jobs that returned to the U.S. jumped to more than 84,100 in 2017 but last year fell back to 47,900 — fewer than the 54,900 in 2016, according to the Reshoring Initiative, a Chicago nonprofit that works with companies to bring manufacturing jobs back to the U.S.
For government procurement officials, the price of competing foreign goods and services is crucial, said David Gallacher, a lawyer and government contracts expert at Sheppard Mullin’s Washington office.
Under current rules, when nondefense agencies evaluate contract bids by large competing firms, foreign-made products are treated as being 6% more expensive than their actual cost. Even so, that’s often not enough to tip the balance toward U.S. suppliers.
Trump’s July 2019 executive order would raise that to 20%, giving a much bigger leg up to domestic producers. But that higher threshold hasn’t taken effect because the White House has not yet issued proposed changes, which were due in January.
“Agencies have blown past deadline,” said Gallacher, adding that the pandemic has further complicated the process and priorities for federal agencies.
Kim Glas, president and chief executive of the National Council of Textile Organizations, said a preference for sourcing essential medical supplies domestically is vitally important for the country and for her members. The pandemic caused the cancellation of roughly 90% of orders for the U.S. textile industry, she said, and the federal government’s spending on face masks, surgical gowns and even things like cotton swabs for testing kits has provided a lifeline for some companies.
But what’s needed, Glas said, is a well-formulated strategy that includes toughened Buy American rules for personal protective equipment and long-term contracts for domestic suppliers.
