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Trump issues new Buy American executive order
Some loopholes exist to exempt agencies and programs bound by Buy American rules already in place
- By Stephen Barlas
- February 7, 2019
President Donald Trump has ratcheted up the pressure on federal agencies to encourage companies winning federal contracts or receiving federal assistance to buy products made with domestic iron, steel, and aluminum.
The Strengthening Buy-American Preferences for Infrastructure Projects executive order Trump issued on Jan. 31 modifies the scope of the Trump administration’s Buy American policy by extending coverage to companies receiving “federal financial assistance” instead of only to those receiving “federal grants.”
The executive order says that “to the extent consistent with law” federal agencies awarding contracts for an infrastructure program should to “the greatest extent practicable” ensure “iron and aluminum as well as steel, cement, and other manufactured products produced in the United States” are used in those contracts, subcontracts, purchase orders, or sub awards. “Produced in the United States” means that all manufacturing processes for iron and steel products, from the initial melting stage through the application of coatings, occurred in the U.S.
The new executive order is an explicit mandate to federal agencies, although it provides loopholes to the extent it only “encourages” federal agencies to insist on domestic content and allows for federal programs with their own Buy American rules. For example, the Environmental Protection Agency’s state revolving funds and federal highway contracts have their own rules determining domestic content for related infrastructure projects. The loopholes allow these agencies and programs to ignore the more expansive language in the executive order if that language conflicts with prior, congressionally mandated rules already in place.
As has been the case since the new administration made protection of the domestic metals industries a political issue, manufacturers that use iron and steel and those that manufacture iron and steel viewed the Trump executive order differently.
“This executive order threatens American jobs. And at a time when infrastructure modernization is much needed, the executive order stands to slow down infrastructure projects and drive up the costs, which will be paid by taxpayers across the country,” said Neil Bradley, U.S. Chamber of Commerce executive vice president and chief policy officer.
Scott Paul, president of the Alliance for American Manufacturing, took the opposing view.
“The president deserves credit for identifying serious, government-wide gaps in Buy America coverage. While this executive order encourages agencies to do a better job, the president should do more. The president should take the next step and use his executive powers to actually require agencies to apply Buy America rules where they do not currently apply. And, he should work with lawmakers to strengthen Buy America as Congress develops an infrastructure package,” Paul said.
A number of congressional members have introduced mandatory Buy American legislation in the past, including Sens. Sherrod Brown, D-Ohio, and Rob Portman, R-Ohio. Their and other bills would make it harder for U.S. companies with federal grants to win “exclusions” from existing Buy American laws. Those exclusions were cited by Peter Navarro, assistant to the president for manufacturing and trade policy and director of the Office of Trade and Manufacturing Policy, who announced the new executive order.
In the 2016 fiscal year, of the 265 listings in the Catalog of Federal Domestic Assistance for infrastructure or construction projects, more than 200 did not require Buy American considerations. These projects, which involved 14 different agencies, added up to more than $45 billion of expenditures, according to Navarro.
New Congressional Effort to Cancel Steel Tariffs
A bill has been introduced in both the Senate and the House to force President Trump (or any future president) to get congressional approval before imposing tariffs based on national security arguments.
The bill—which also would apply to any tariffs imposed in the last four years—is a direct challenge to Trump’s 25 percent tariff on imported steel and 10 percent tariff on imported aluminum imposed last year. These tariffs have hurt U.S. manufacturers that buy and use metal to produce parts, assemblies, and end products across several industry segments.
Sen. Bob Corker, R-Tenn., introduced this bill in the last Congress, but late in the session. He retired at the end of 2018. Sen. Pat Toomey, R-Pa., is now the chief sponsor in the Senate, and Rep. Mike Gallagher, R-Wis., is the chief sponsor in the House.
A spokesman for Toomey said he already has gained the support from five Democrats, as well as four Finance Committee members. The Finance Committee would have to approve the bill.
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The Fabricator is North America's leading magazine for the metal forming and fabricating industry. The magazine delivers the news, technical articles, and case histories that enable fabricators to do their jobs more efficiently. The Fabricator has served the industry since 1970.
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