Biden signs order strengthening 'Buy American' rules
Washington — President Joe Biden signed an executive order Monday aimed at bolstering federal government purchases from American manufacturers.
The federal government spends around $600 billion annually on contracts, according to the White House, and Biden's order intends to leverage those funds to support U.S. workers and manufacturers.
"I don't buy for one second that the vitality of American manufacturing is a thing of the past," the president said shortly before signing the order. "American manufacturing was the arsenal of democracy in World War II, and it must be part of the engine of prosperity now."
The order directs the agency in charge of federal procurement to raise the minimum threshold of parts that must be made in America to qualify under the existing "Buy American" law. It also increases the price preference for domestic products, which is a percentage added to foreign contractors' offers when determining the lowest price.
Under the decades-old Buy American Act, at least 50% of the components of a product must come from within the U.S. to qualify as a domestic good. Former President Donald Trump also issued executive orders that affected the act, including one that pushed to raise that threshold to 95% for iron and steel products and 55% for other products.
Biden's order doesn't specify the number the new threshold should be, but directs his administration to consider allowing the public to comment on a proposed rule. The order also calls for a new component "test" that adds more weight to American-made parts that add more value to a product.
Depending on the threshold, the order may prove complicated for many U.S. automakers. Vehicles made by U.S.-based automakers usually contain more parts made in the U.S. than automakers based in foreign countries, according to the National Highway Traffic Safety Administration.
But not always — Japan-based Honda Motor Co., for example, is high on the list of automakers using U.S.-made parts. Still, many American automakers use a significant percentage of parts sourced from other countries.
Jay Timmons, president of the National Association of Manufacturers, lauded the order in a statement. But he said the administration should work to protect "access to critical global supply chains and the resources that our lifesaving and life-changing products require."
In a statement, Ford Motor Co. said that it has yet to review the details of the order but believes investing in U.S. goods and services "must be a national mission. President Biden’s early focus on investing in American manufacturing is critical to the continued success of the U.S. auto industry.”
General Motors Co. issued a statement saying it "is encouraged by President Biden’s commitment to supporting American manufacturing" and also looks forward to reviewing the order. A spokesperson for Stellantis NV, the maker of Jeep SUVs and Ram pickups, declined to comment until the order has been made public.
Under the order, it also will be harder for non-American contractors to qualify for waivers to sell products to federal agencies. And it requires the administration to build a website showing existing contracts with foreign companies.
Agencies will be directed to use the Manufacturing Extension Partnership to connect with small and mid-sized manufacturers to bring new domestic suppliers into the government contracting system, review how they're implementing existing laws, and recommend ways to achieve Biden's "Made in America" goals.
The U.S. Office of Management and Budget will add a "Director of Made-in-America," who will be responsible for implementing the order.
The existing "Buy American" law is intended to ensure taxpayer money supports American workers and businesses, Biden said. He argued the Trump administration didn't "take it seriously enough" and too frequently waived the requirement "without much pushback at all."
Tens of billions of federal dollars have gone to foreign companies, Biden said, including $3 billion in defense funding on foreign construction contracts in 2018 and $300 million on foreign engines and vehicles.
Biden reiterated his commitment to replace federal fleets with American-made electric vehicles and to make "historic investments" in the research and development of battery technology, artificial intelligence and clean energy — all which have a direct impact on the auto industry.
"Together, this will be the largest mobilization of public investment in procurement, infrastructure and R&D since World War II," he said.
Rory Gamble, president of the United Auto Workers, said in a statement that the order "sent a strong message to American workers that our government will do all it can to support buying American products, made here by American workers. Today’s action is a powerful statement of solidarity with our hard-working brothers and sisters."
U.S. Rep. Debbie Dingell, D-Dearborn, also praised the decision in a statement Monday, saying Biden and Vice President Kamala Harris are "strengthening labor unions, leveraging federal contracts to support domestic manufacturing, and investing in American workers."
The White House said in a press release that the order fulfills Biden's campaign promise to "make Buy American real and close loopholes that allow companies to offshore production and jobs."
Biden has promised to create a million new jobs in auto manufacturing, auto supply chains and auto infrastructure through an administration-wide effort to advance sustainable energy and transportation systems.
On the campaign trail, Biden touted his record of supporting American manufacturing, including his involvement in the 2009 auto bailout.
Auto industry manufacturing jobs have significantly declined in Michigan since the early 2000s, though current employment levels before the COVID-19 pandemic had reached similar levels to those right before the Great Recession, according to the Bureau of Labor Statistics. As of October 2020, the latest official data available, there were 37,700 jobs in auto manufacturing in Michigan.