Biden administration moves to increase Buy American requirement to 75% by 2029
Washington — The Biden Administration issued a proposed rule Wednesday that would raise the requirement for American-made parts in products purchased with taxpayer dollars to 75% by 2029.
Under the proposed rule, a product would immediately have to meet a threshold of at least 60% U.S.-made components to qualify under the existing "Buy American" law, which requires federal agencies to buy American-made products whenever possible. Currently, products must have 55% American-made parts to qualify.
That threshold would be raised to 65% by 2024 and 75% by 2029, the officials said, adding that the phased transition is intended to allow government contractors to transition their supply chain to domestic suppliers.
Until 2029, products with 55% American-made parts would be able to qualify if no other U.S. supplier can meet the higher percentage requirements.
"In recent years, 'Buy American' has become a hollow promise," President Joe Biden said at an event Wednesday at Mack Trucks in Macungie, Pennsylvania. "But my administration is going to make 'Buy American' a reality. I'm putting the weight of the federal government behind that commitment."
The federal government spends around $600 billion annually on contracts, according to the White House.
The rule also proposes implementing higher price preferences — a percentage added to foreign contractors' offers when determining the lowest price — for critical products identified by the administration such as electric vehicle batteries and minerals, pharmaceuticals, and semiconductor chips to incentivize domestic production.
Companies would also be required to report the total domestic content in products, rather than simply say whether they meet the standards, for critical products.
"We saw during the early days of the pandemic that the supply chain disruptions can put Americans’ lives and livelihoods at risk. When we needed them most, we were short of protective equipment, we were short on ventilators and other essential health equipment," Biden said.
"We need to have a resilient supply chain of our own so that we’re never again at the mercy of other countries for critical goods ever again."
Biden asked the administration to identify ways to strengthen the Buy American rules earlier this year, and the proposed changes reflect the administration's professed interest in reshoring American manufacturing and jobs. 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 from 50% to 55% for other products.
Tens of billions of federal dollars have gone to foreign companies, Biden said earlier this year, including $3 billion in defense funding on foreign construction contracts in 2018 and $300 million on foreign engines and vehicles.
The proposed rule 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. And many American automakers use a significant percentage of parts sourced from other countries.
The National Association of Manufacturers, Ford Motor Co. and General Motors Co. praised the administration's efforts to bolster American manufacturing by reviewing Buy American rules in January.
Biden has "made good on his promise" to strengthen Buy American standards, United Auto Workers President Ray Curry said in a statement Wednesday
"Joe Biden understands what it means to prevent companies from off-shoring those jobs and making sure that we reverse the trend, and that American taxpayer money is used to leverage the jobs that feed American families and communities for decades to come," Cu.
Michigan Sens. Debbie Stabenow, D-Lansing, and Gary Peters, D-Bloomfield Township, proposed legislation earlier this year that would similarly raise American-made requirements, which was included in a larger package aimed at increasing U.S. competitiveness with China that was approved by the Senate in June.
Once the rule is published in the Federal Register, the public will be able to submit comments on it for 60 days before the administration moves to finalize the requirements.