Steel Cheers Biden Order Cracking Down on 'Buy American' Cheats

The move is important because the federal government spends approximately $600 billion on contracting. And a revamp is overdue because domestic-preference rules have in some cases not been “substantially updated” since 1954–during the Eisenhower administration, the White House said.

The action was cheered by the American Iron and Steel Institute (AISI) and the Steel Manufacturers Association (SMA), the two main lobbying groups for the U.S. steel industry, as well as by the United Steelworkers (USW) union.

The White House Plan

“This Executive Order fulfills President Biden’s promise to make ‘Buy American’ real and close loopholes that allow companies to offshore production and jobs while still qualifying for domestic preferences,” the White House said Monday.

Biden’s executive order will also accomplish the following, the White House said:

• Paves the way for a “crack down” on waivers to Buy American requirements and directs the government to publish waivers on a publicly available website.

• Creates a new role–Made-in-America Director–at the Office of Management and Budget (OMB) to make sure the executive order is enforced.

• Increases the domestic-content threshold necessary for material to be used in federal government work.

• Directs the government to work with small- and medium-sized manufacturers when looking to find new U.S. suppliers of needed products.

The executive action in addition highlights the Biden administration’s intent not only to invest in domestic manufacturing but also to work with members of Congress–both Republicans and Democrats–who have long supported “Buy American” and “Buy America” legislation, the White House said.

The “Buy American Act,” passed in 1933, requires that U.S.-made products be given preference in federally funded projects. The “Buy America Act,” in place since 1983, requires that steel used in infrastructure projects be melted and poured in the United States. The U.S. steel industry has long championed both. 

Steel Industry Reaction

The AISI offers its “strong support” to President Biden’s executive order, AISI President and CEO Kevin Dempsey said in a statement.

“Today’s executive order will tighten up the process for considering waivers to existing domestic-preference requirements and will also increase domestic-content requirements for defining what constitutes a product that is made in the United States.” The changes will ensure that “taxpayer dollars are used for products made in America–most significantly, the use of American steel,” he said.

SMA President Philip Bell also applauded the executive action. “When we eliminate loopholes that allow billions of dollars to go to imported products paid for by taxpayers rather than American made products, we can truly ‘Build Back Better.’

“Our nation’s infrastructure should be built by Americans for Americans using domestic steel that is sustainably melted and poured. Today’s actions by President Biden support that goal,” Bell said.

“Build Back Better” is President Biden’s plan to create jobs and to help the U.S. economy recover from the COVID-19 pandemic and the mass unemployment it has caused.

“The COVID-19 crisis demonstrated that we are sorely unprepared to meet our own needs, and this remains true of countless products,” USW International President Tom Conway said in a statement.

“If we want to heal our nation in the wake of the deadly pandemic, we must take bold action to rebuild our economy, creating good jobs and broadly shared prosperity. President Biden’s executive order is a critical part of that effort,” he said.

Critics of Buy America/Buy American provisions are quick to point out that there’s a downside–in some cases taxpayers end up paying more for materials because the government can’t consider cheaper import options.

By Michael Cowden, michael@steelmarketupdate.com