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How Trump’s ‘Buy American’ order could play out

First Published      Last Updated Apr 19 2017 12:48 pm

Washington • When President Donald Trump signed an executive order Tuesday in Kenosha, Wisconsin, he sent a characteristically blunt message.

"The policy of our government," Trump declared, "is to aggressively promote and use American-made goods."

For too long, he complained, American companies that have bid on U.S. government contracts — for work ranging from building roads to supplying computer equipment — have unfairly lost out to foreign competitors.

"The result has been countless jobs and countless contracts that have been lost to cheap, subsidized and low-quality foreign goods," the president argued.

"Buy American" requirements that are written into U.S. law "have been gutted," he said, by loopholes, allowing too many contracts to go to overseas bidders. Countless jobs and contracts that have been lost to cheap, subsidized and low-quality foreign goods, Trump asserted.

Under his presidency, Trump assured the crowd, that will change.

Here's a look at how Buy American provisions work, what the White House intends to do and what it all might mean for government contracts and the taxpayers who finance them.



The Buy American Act of 1933 gives U.S. contractors a preference in the awarding of federal contracts. Additionally, the Surface Transportation Act of 1978 requires that American-made iron, steel and other manufactured goods be used when federal dollars pay for highway, aviation, rail and other transportation projects.



Government contracting "is a highly complex area, with lots of exceptions and exceptions to exceptions," says Stephanie Harden, a lawyer specializing in government contracts at Blank Rome LLP. Government agencies can bypass U.S. suppliers, for example, whose bids come in too high or if the required goods and services aren't available domestically. Under several free-trade deals — including the World Trade Organization's Agreement on Government Procurement — contractors from 59 countries have the right to be treated the same as U.S. companies when it comes to many federal contracts.

But the White House says that such exemptions have gone too far and that U.S. contractors are unjustly losing out. The U.S. Government Accountability Office, a federal watchdog agency, reported in February that under the WTO procurement agreement, foreign companies have gained far more access to U.S. government contracts than American companies have gained to overseas government contracts.

"These rules offshore our tax dollars rather than investing them to create jobs and innovation at home," says Lori Wallach, director of Public Citizen's Global Trade Watch, a critic of U.S. trade policy.



Not much — at least initially.

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