Public Contract Law Journal

"Buy American & Hire American": President Trump's Options for Strengthening the Buy American Act

by Soohyun Choi

Soohyun Choi (schoi2@law.gwu.edu) is a J.D. candidate at The George Washington University Law School and a Notes Editor of the Public Contract Law Journal. She would like to thank Professors Christopher Yukins and Megan Bartley for their guidance throughout the Note-writing process.

I.  Introduction

On January 20, 2017, about ten minutes into his inaugural address, President Trump announced his economic vision to the world in five simple words: “Buy American and Hire American.”1  As a presidential candidate, he continuously pushed this populist economic message because he knew it resonated with voters in the Rust Belt states, where the loss of manufacturing jobs have devastated communities.2 Three months into his presidency, on April 21, 2017, President Trump issued Executive Order 13,788, directing his cabinet to develop  policies  to  strengthen  “Buy  American”  laws.3  President  Trump  has made it clear that he wants to revitalize the U.S. manufacturing sector; if he thinks reinforcing domestic preference policies would accomplish that goal, a good place to start is the Buy American Act of 1933 (Buy American Act or Act). The Act requires federal agencies to favor domestic goods over foreign goods in federal procurement.4 It is an overarching statute that aims to protect manufacturing jobs in the United States.5 This Note discusses the Trump administration’s options for strengthening the Buy American Act.

This Note is divided into four parts. Part II discusses the Buy American Act’s history, basic statutory scheme, and exceptions.  Part III establishes that the Act has at least four major loopholes that significantly undermine the  Act’s  purpose  of  preferring  domestic  products  in  federal  procurement and  protecting  U.S.  manufacturing workers:  (1)  federal  agencies’  definition of “domestic offers,” which receive preferential treatment under the Act, encompasses significant foreign material; (2) the Act’s exceptions allow the Department of Defense (DoD) to purchase billions of dollars’ worth of goods from foreign entities annually without applying domestic preference; (3) the Federal Acquisition Regulation (FAR)’s definition of “nonavailable” products, which are not subject to domestic preference, includes goods produced in sufficient quantities in the United States; and (4) due to the Trade Agreements Act’s waivers of the Buy American Act, domestic preference no longer applies to offers from dozens of foreign countries in large-scale procurements.

Part IV highlights three important policy considerations for the Trump administration in deciding how to strengthen the Buy American Act: (1) manufacturing jobs are disappearing in large part due to automation; (2) strong domestic preference policies can induce firms to adjust their supply chains to create manufacturing jobs in the United States; and (3) strong domestic preference policies may carry significant costs. Keeping these policy considerations in mind, Part V discusses legal options for the Trump administration to strengthen the Buy American Act. The administration may determine that the best way to protect U.S. manufacturing workers while minimizing the costs of domestic preference policies is to tighten certain loopholes while keeping others intact. The administration could set policies that curb agency discretion to treat foreign products as “domestic offers,” require the DoD to apply domestic preference to products for use outside of the United States (unless there is a threat to national security), and limit situations in which domestic goods are considered “nonavailable.”

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