February 04, 2019

Trump's Second Bite at the Buy American Apple Has More Teeth

3 min

Nearly two years ago, President Trump issued his much-publicized Buy American and Hire American executive order (EO 13788, April 18, 2017). Last week, President Trump made public a second, related executive order: Strengthening Buy-American Preferences for Infrastructure Projects.

As we discussed two years ago, while EO 13788 sought to usher in a "new, more muscular Buy American policy based on the twin pillars of maximizing Made in America content and minimizing waivers and exceptions to Buy American laws," the executive order did not contemplate any immediate action; instead, it was an information-gathering exercise. In particular, the April 2017 EO directed every federal agency to "scrupulously monitor, enforce and comply with Buy American laws," and tasked the secretary of commerce with reviewing all agency findings and submitting a report to President Trump. The order sought to minimize grants of waivers and require agency heads to consider whether the cost advantage of a foreign-sourced product is the result of the use of dumped or subsidized goods. Finally, the order strongly reaffirmed the "melted and poured" standard for U.S. steel production, without which semi-finished steel would be imported from countries like China and Russia.

Trump's latest Buy American executive order is aimed at addressing gaps in current Buy American policies. (Existing policies provide preferences for U.S.-made products in the procurement context but not in the federal financial assistance context (e.g., federal grants, cooperative agreements, loans, etc.).) Thus the new order directs agency leaders to develop implementing regulations that apply Buy American requirements to these federal financial assistance programs, whenever practicable.

White House director of trade and industrial policy, Dr. Peter Navarro, published a Fox News oped arguing in support of the EO. Dr. Navarro writes: "As President Trump has said, 'economic security is national security.' There is no better example of this than the benefits that Buy American, Hire American programs bring not just to our working families but also to our defense industrial base." Among other things, this echoes the administration's position on the Section 232 steel and aluminum actions, which are the subject of many challenges at the World Trade Organization (WTO) and may foreshadow a similar action for automobiles. Notably, however, the new EO directs federal agencies "administering a covered program" to "encourage recipients of new Federal financial assistance awards pursuant to a covered program to use, to the greatest extent practicable, iron and aluminum as well as steel, cement, and other manufactured products produced in the United States in every contract, subcontract, purchase order, or sub-award that is chargeable against such Federal financial assistance award" (emphasis added). Note that the EO only encourages – it does not require. And the EO is not to be construed to impair or affect existing rights or obligations under international agreements, which is likely meant to signal compliance with the WTO's Government Procurement Agreement and other free trade agreements. By May 31, agencies administering a covered program must report to the president, through Dr. Navarro, on their progress.

While the administration is touting for political benefit that this is yet another example of the president keeping his promise to focus on American workers and families – and this has certainly been a consistent theme throughout his tenure as president – in light of the above, there may not be need for serious concern that the current EO on its own is a significant departure from the Trump administration's past practice.