When clients ask about “Buy American” restrictions, which apply to direct purchases by the federal government, they don’t always realize that they are referring to a shifting body of legislation that has been around for more than 80 years, since the Buy American Act of 1933 was passed. Since then, Buy American legislation has grown considerably, to include the often-confused, so-called Buy America Act, which was enacted in 1983 and applies only to mass-transit-related procurements.
On Tuesday, the general body of information on Buy American restrictions grew even larger after President Trump signed an executive order ushering in a “new, more muscular Buy American policy based on the twin pillars of maximizing Made in America content and minimizing waivers and exceptions to Buy American laws.”
The executive order directs every federal agency to “scrupulously monitor, enforce and comply with Buy American laws,” and further tasks Secretary Commerce Wilbur Ross with reviewing all agency findings and submitting a report to President Trump within 220 days. The new order seeks to minimize grants of waivers, and in particular will “more narrowly” construe public-interest waivers, which are already rarely granted. The order also requires agency heads to consider whether the cost advantage of a foreign-sourced product is the result of the use of dumped or subsidized goods.
Additionally, the order focuses on the role of Buy American laws in free trade agreements and, specifically, on whether the United States is getting its “fair share” of global government procurement when it treats foreign suppliers like American companies. The executive order does not actually rescind any trade agreements or call for their renegotiation, but it does call for more information to determine which deals are working for America and which ones are not.
Finally, the order strongly reaffirms the “melted and poured” standard for U.S. steel production, without which semi-finished steel would be imported from countries like China and Russia.
As indicated above, the executive order does not contemplate any immediate action; instead, it is an information-gathering exercise that may or may not result in changes in enforcement, legislation, or trade agreements. It is also a signal to other countries that the United States wants a larger piece of the global government procurement pie. While we await the eventual outcome of the executive order, the various and often complicated compliance issues associated with Buy American laws remain intact, and should be broached with legal counsel, since—even with a greater articulation from the Trump administration about the government’s approach to buying American—there is still no “one size fits all” Buy American test.