Biden tightens 'Made in America' loophole to boost domestic manufacturing

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Currently products only have to be composed of 55% American materials to qualify as 'Made in America.'

The Biden administration on Friday announced that it had updated the rules for implementing the provisions of the Buy American Act of 1933 "to ensure taxpayer dollars create good-paying jobs here at home, strengthen critical supply chains, and position U.S. businesses to compete in strategic industries."

The Buy American Act requires the federal government to give preference to products made in the United States in its purchases. To qualify as domestically produced, a product must be manufactured in the United States, and components totaling at at least 55% of its overall value must also be manufactured in the country.

The administration's final rule will raise the percentage of the content that must be manufactured in the United States for an item to qualify as "Made in America" from the current level of 55% to 75% over the course of seven years.

The threshold will be increased to 60% in 2022 and 65% in 2024, and will eventually reach 75% in 2029. The phased implementation is designed to give manufacturers time to adjust to the new requirements.

Each year, the U.S. government spends about $600 billion on procurement, with half of that sum spent on manufactured products. The Biden administration has said that using the immense purchasing power of the government to shape the overall market is central to President Joe Biden's industrial strategy.

The Biden administration has previously said that adoption of the rule would lead to increased business for domestic manufacturing firms, particularly small and medium-sized companies.

The newly implemented rule is a follow-up to an executive order Biden signed in his first week in office in 2021, which directed the government to implement a strategy that would lead to the purchase of more American-made products.

Former President Donald Trump repeatedly used "buy American" rhetoric during his term in office, but, as the Los Angeles Times noted in August 2020, his "Buy American, Hire American" campaign "went nowhere."

While Trump signed multiple executive orders aimed at increasing federal spending on American-made products, he did not follow them up, and his administration did not implement rules to change broad exceptions to the "buy American" mandate.

Biden's executive order created a Made In America office under the Office of Management and Budget. This office now has oversight of waivers submitted by government agencies seeking to bypass the "Made in America" requirements.

"I'm directing the Office of Management and Budget to review waivers to make sure they are only used in very limited circumstances," Biden said on Jan. 25, 2021, when signing the executive order.

The administration also created a new website where waivers can be examined by the public.

Published with permission of The American Independent Foundation.