On April 17, 2017, President Donald Trump signed the Buy American, Hire American Executive Order, which aimed to garner higher wages and more opportunities for American workers through thorough enforcement of United States immigration laws and administration support for American manufacturing and defense contractors.
In order to promote economic and national security and to help stimulate economic growth, create good jobs at decent wages, strengthen our middle class, and support the American manufacturing and defense industrial bases, it shall be the policy of the executive branch to maximize, consistent with law, through terms and conditions of Federal financial assistance awards and Federal procurements, the use of goods, products, and materials produced in the United States.
In order to create higher wages and employment rates for workers in the United States, and to protect their economic interests, it shall be the policy of the executive branch to rigorously enforce and administer the laws governing entry into the United States of workers from abroad, including section 212(a)(5) of the Immigration and Nationality Act (8 U.S.C. 1182(a)(5)).
On Wednesday, the White House announced its intent to issue another executive order, this time to expand the “Buy American” principle to government infrastructure projects.
Trump called for similar standards in the construction of oil pipelines through an executive order four days after his inauguration.
CNBC reported that over the last six months, as Trump contemplated an expansion of Hire American, Buy American, several government agencies – the Department of Defense, the Small Business Administration, the Department of Transportation, the Office of Management and Budget and the White House’s Office of Legal Counsel – “raised concerns about the potential purview of the order, originally proposed by one of President Donald Trump‘s key trade advisors, Peter Navarro.”
Possible complications in applying the EO to federal projects, according to CBNC, include “a legal question of whether the executive branch alone could require vendors to source specific products and a financial question of how much such a policy would cost the government.”
Concerns over cost would have to be managed by the Office of Management and Budget, which oversees spending for federal departments.
One source familiar with the deliberations told CNBC that “the expectation is that it would cost a lot more money,” because “if an agency chooses to buy a product not made in America, one main reason would be because it was more cost-effective.”
How much more these changes would cost the federal government has not been determined, however, Buy American provisions already require state infrastructure funded by the Department of Transportation to use American-made materials in 100 percent of their projects.
Waivers are available if the cost of U.S. goods is “considered unreasonable. This is because foreign labor and materials are typically much cheaper than those of their American competitors.
“Typically, if we see a change in sourcing, it’s usually going towards a place like China or India as opposed to coming back to the U.S.,” said Michael Mason, a partner at Hogan Lovells, an international law firm that represents government contractors. “And the reason why companies are doing that is because labor and materials are cheaper, and they could offer the government a lower cost.”