By Made in America Director Celeste Drake
When the COVID-19 pandemic struck, it upended almost every aspect of American life and devastated our economy—including in the American manufacturing industry. Not only did the pandemic erase 578,000 manufacturing jobs in 2020, but it also shined a bright light on deep and decades-old cracks in our supply chains that undermine our economy, our health, and our national security. President Biden has committed to addressing these challenges head-on and making the promise of “Made in America” real. And this week, he took another crucial step toward fulfilling that commitment by announcing the most significant change to the Buy American Act in 70 years.
America had an industrial policy when we became the world’s manufacturing powerhouse during World War II, and many of our most successful allies, including Germany and Korea, use one now. But for too long, our country neglected our manufacturing sector, and the resulting weaknesses in our supply chains left us vulnerable. It’s part of the reason why we had insufficient domestic sources for certain medicines and medical equipment at the outset of the pandemic—and why we continue to experience shortages of semiconductor chips critical to everything from gaming consoles to automobiles.
Over the past six months, the Biden administration has already begun shoring up American industrial strength and technological innovation while creating stable jobs for American workers. In his first days in office, the President signed a Made-in-America Executive Order that will support good-paying jobs, bolster domestic manufacturing, and strengthen our supply chains and rebuild our industrial base. Through targeted public investment and strategic public procurement, the Administration is undertaking a whole-of-government effort to jumpstart American industry by investing in strategic industries, while providing more opportunities for workers and firms, large and small, in every region of the country—including historically disadvantaged businesses.
The Administration is also using the implementation of the Made-in-America Executive order as an opportunity to tackle the climate crisis through investment in our domestic clean energy supply chain. The American Jobs Plan commits $46 billion to clean energy infrastructure in order to build a more resilient, sustainable, and modern economy.
Why is that type of effort so important? The United States is the single largest buyer of consumer products in the world, spending over $600 billion in contracts annually. We must take this crucial opportunity to leverage this vast purchasing power to shape markets while fostering innovation across the private and public sector.
To ensure we make the most of that opportunity, the President earlier this week announced major changes to regulations under the Buy American Act that will help ensure federal purchasing power is used to invest in American industry and all of America’s workers.
These new rules increase the domestic content threshold for a product to be considered “American made” both immediately and over the long term. Currently, for federal procurement purposes, a product qualifies as “made in America” if the values of its domestic components exceed 55%. The Administration’s proposed rule would increase this requirement to 60% immediately and then to 75% over the next few years. This staged increase will not only ensure that more taxpayer dollars support domestic firms and families, but it also provides a clear signal to industry that investments in America will provide additional opportunities in federal procurement.
Equally important, the new proposed rules will help address the shortages of critical products—like semiconductors or medicines. As we witnessed during the pandemic, some products are simply too important to our health, economy, and national security to leave their availability up to chance. The rule will allow agencies to pay a little more for domestically produced items that are considered critical to national security, and it will create a new reporting requirement to increase information on the domestic supply chains for those goods. Applying strategic preferences to encourage domestic production of critical items just makes sense. Further, the new reporting requirements will build confidence that Made in America laws are operating as intended while providing us with greater data to make informed decisions about our economic future.
The future of our economy depends on continuing to make smart investments, giving our workers and companies the tools they need to compete, and using taxpayer dollars to buy American and spark American innovation. To be clear, ensuring we buy more U.S. content when we buy American doesn’t mean walking away from our trading partners—strong, resilient supply chains require redundancy and international cooperation. But the Made in America initiative presents an exciting opportunity to ensure we strengthen our economy by buying from all of America. The American story has always been deeply rooted in our ability to reinvent ourselves in the face of new challenges. Together, let’s reinvent American manufacturing and innovation so that the future is made in America by all of America’s workers.