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October 2, 2023 Expert’s Corner

Dispelling misconceptions about ‘Buy American,’ other related laws

Jeff White
By Jeff White

There is massive confusion both in the manufacturing community and the popular press.

Even some of the well-respected industry publications have had a hard time getting it right.

We see and hear the terms all the time: “Buy America,” “Buy American,” “Made in the USA,” “Made in America,” “Build Back Better.”

While all of these terms have a tinge of economic nationalism, very few manufacturers can unravel not only what each term means, but also what type of economic opportunity they present.

First, let’s get the common misconceptions out of the way:

  • Buy American and Buy America aren’t the same thing. They also aren’t the same as “Made in America” and “Made in the USA.”
  • These also aren’t new laws passed by the Biden administration, or controlled by one particular agency.

Second, a history lesson: Economic nationalism or protectionist policies have been around since the United States was founded.

Did you know that George Washington wore a brown suit to his inauguration and not a military uniform? He also did not want to wear a civilian suit that was made anywhere but the United States.

So, where do you find a suit in 1789? He actually got it from the Hartford Woolen Manufactory in Hartford, Connecticut.

Two of the more well-known nationalist policies are “Buy American” and “Buy America.” Yes, these are two different laws that have different requirements.

“Buy American” was passed by Congress in 1933 and signed by President Hoover during his last day in office. It applies to all goods purchased by the U.S. federal government valued at more than $10,000.

The law requires that such goods be “produced in the U.S.,” although the requirement may be waived under certain circumstances.

Produced in the U.S. means 100% manufactured in the U.S., with a set percentage of the component costs coming from the U.S.

Historically, the set percentage of U.S. component costs was 50%, but that’s changed over time. It’s currently 60% and is set to increase to 65% in 2024, and 75% by 2029.

In contrast, the “Buy America” Act was a provision of the Surface Transportation Assistance Act of 1982. It relates to mass transit procurements that are funded at least in part by federal programs.

The Buy America Act bars the award of federal financial assistance for infrastructure projects unless all iron, steel, manufactured products and construction materials used are produced in the U.S.

For iron and steel products, “produced in the U.S.” means all manufacturing processes — from the initial melting stage through the application of coatings — must occur in the United States.

For manufactured products, “produced in the U.S.” means the product was manufactured in the United States; and the cost of the product’s U.S.-made components exceeds the required percentage of the total cost of the product’s components.

If that was not confusing enough, President Biden in November 2021 signed the “Build America, Buy America (BABA)” law. BABA expands the 1982 “Buy America” requirements and imposes a domestic preference on all infrastructure projects that receive federal funding.

BABA has its own set of agency-specific standards and waivers.

Finally, please do not confuse these laws with “Made in the USA” or “Made in America” laws. These laws relate to claims from manufacturers and marketers regarding the amount of U.S. content in a product.

The Federal Trade Commission polices this area and frequently imposes penalties for violations.

Is there an opportunity for manufacturers? Absolutely. The initial step, of course, is to understand the playing field.

Jeff White is a partner at law firm Robinson & Cole LLP. He provides counseling and dispute resolution advice for manufacturers throughout the United States and globally.

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