Economy

Trump Signs Order to Strengthen “Buy American” for Infrastructure

January 31, 2019

President Trump signed an executive order today intended to boost the use of American-made iron, steel and other manufactured products in infrastructure projects by adding pressure on private and public sector entities that receive federal financial assistance.

Called “Strengthening Buy American Preferences for Infrastructure Projects,” the order directs agency heads to “encourage recipients of new federal financial assistance to use, to the greatest extent practicable, iron and aluminum, as well as steel, cement, and other manufactured products produced in the United States,” said White House trade advisor Peter Navarro. While the measure will “reinforce this administration’s Buy American preferences” by “providing strong presidential guidance,” he said, it does not include mandatory provisions, enforcement mechanisms or specific purchasing targets.

Thomas J. Gibson, president and CEO of the American Iron and Steel Institute, said that the president’s “Buy American, Hire American” executive order is another positive step in ensuring the fullest possible implementation and enforcement of existing domestic procurement laws and ensuring the steel industry remains competitive. “Strong domestic procurement preferences for federally funded infrastructure projects are vital to the health of the domestic steel industry, and have helped create manufacturing jobs and build American infrastructure. This latest executive order builds upon President Trump’s April 2017 executive order on this topic, which resulted in stronger compliance with our domestic procurement laws, including Buy America requirements, and a marked reduction in waivers to those laws,” Gibson said.

In a recent op-ed, Navarro claimed that spending on American-made products during the Trump administration has increased by $24 billion over the previous three-year average. At the same time, use of waivers to justify the purchase of foreign-made goods declined by 16 percent government-wide from the 2017 fiscal year to the 2018 fiscal year, resulting in a 10-year low in spending on foreign-made goods.

The Steel Manufacturers Association also supported the president’s executive order. SMA President Phil Bell explained that each year government agencies give billions of dollars to nongovernment entities in the form of loans, loan guarantees, grants, insurance and interest subsidies. Last year, 14 agencies gave out about $45 billion for over 200 projects that did not use Buy American principles, he noted, citing administration figures. “Many people don’t understand that when states or municipalities receive federal grants, they are not always required to use Buy American principles in their procurement. The administration hopes this will encourage a lot of contractors in states and municipalities to take a second look at how they procure their steel.”

Washington trade attorney Lewis Leibowitz said the new executive order expands the potential application of Buy American principles to products that receive “new federal financial assistance” rather than just “federal grants” as stated in the April 2017 executive order. “Obviously, the administration wants to expand the definition as much as possible,” he said.

However, because it applies to “new” financial assistance, it does not appear to apply to projects already under way. The executive order also requires executive branch agencies to compile a list of strategies to encourage contractors to maximize the use of iron, aluminum, steel, cement and other manufactured products produced in the United States

The executive order defines steel “produced in the United States” to include steel that is not only melted and poured but coated (if applicable) entirely in the United States. “No other product has such a restricted definition of ‘produced in the United States,” Leibowitz added.