Background Briefing on Buy American, Hire American Executive Order

As a fourth and final element of this executive order, where we go to this box here, the order strongly reaffirms the melted and poured standard for U.S. steel production.  The standard remains under attack by foreign interests and lobbyists, but it is critical to maintaining the integrity of our Buy American laws.  

Semi-finished steel, such as steel slab, accounts for about 90 percent of the input costs of a finished steel product.  And if a lesser standard than melted and poured were used, slabs could be imported from countries like China and Russia and only 10 percent of the production of steel would likely occur in the United States, with all of the negative impacts on jobs this would entail.

Here, it is useful to note that every direct job in the U.S. steel industry creates seven more jobs in the U.S. economy.  And through this multiplier effect, the steel industry here in America supports more than a million jobs.  

As part of this multiplier effect, the use of the melted and poured standard ensures that the benefits of Buy American are felt throughout the supply chain, assisting suppliers of raw materials critical to steelmaking, such as iron ore, coal, and limestone miners.  In each of these ways, the melted and poured standard would let us fully capture the positive impact of infrastructure spending on the iron and steel manufacturing industry supply chains.  From the iron mines of Minnesota, Michigan and Alabama, and coal mines of Kentucky and West Virginia, to the integrated mills of Indiana and Pennsylvania, to the downstream finishing and fabrication shops throughout the nation.

As a final comment, critics of Buy American policies typically offer two lines of attack.  The first is that Buy American policies drive up prices in costs, and therefore harm consumers and taxpayers.  However, this critique fails to take into account either the positive income and tax-based effects generated by Buy American, or the external benefits associated with strengthening the manufacturing and defense industrial base through domestic procurement preference programs.

In particular, Buy American and Hire American policies lead to increased jobs and economic growth, higher wages, and a more robust tax base, and thereby offset any price or cost effects.  At the same time, it is critical to the long-term economic and national security of this country to maintain a robust manufacturing and defense industrial base.  And Buy American contributes to this effort across virtually every sector of our manufacturing economy, even as Hire American helps us maintain a highly skilled and highly trained domestic workforce.

The second line of attack of Buy American raises the specter of retaliation by our trading partners.  This is simply a red herring, given that virtually all of our trading partners embrace similar kinds of domestic preference procurement programs and such programs are fully compliant with international trade law.  This argument also rings hollow, given that the available evidence that I’ve shown you already indicates the U.S. is a big net loser in the global government procurement market.  
 

*Note: This is an excerpt, full text can be found at https://www.whitehouse.gov/the-press-office/2017/04/17/background-briefing-buy-american-hire-american-executive-order

PUBLIC BLUEPRINT