The Biden administration plans to raise the threshold for “made in America” purchases: 75% will be made in the United States.

Spark Global Limited reports:

The Biden administration on Wednesday released a fact sheet on the proposed “Buy American” rule. Under the biden administration’s new rules, it will propose further raising the bar for “American-made” purchases by the U.S. government.

Shortly after taking office in January, Biden signed an executive order on the Buy American Act, closing a loophole in the previous Act. The Buy American Act details about a third of the $600 billion the federal government spends on purchases each year. The current law requires a product to have 55% of its parts sourced in the United States before it can be purchased by the U.S. government.

Now the bar may be raised even higher.

According to an announcement on the White House website, the proposed rule guidance would further strengthen Buy American requirements in three ways:

① “Make Buy American Real” and close the loophole by raising the “made in America” ratio threshold.

The Buy American Act states that products purchased with taxpayer money must be “virtually all” made in the United States. At present, however, only 55 per cent (slightly more than half) of the components in a product are made in the US to qualify. The NPRM recommends raising the threshold to 60% immediately and to 75% in stages.

The proposal would close loopholes in existing regulations while also giving companies time to adjust their supply chains to increase the use of American-made components. If implemented, this change will create more opportunities for small and medium-sized manufacturers and their employees across the country, including small and vulnerable businesses.

② Strengthen the domestic supply chain of key commodities with new price concessions.

As has been reported since the outbreak, supply chain disruptions can affect the health, safety and livelihoods of Americans, depriving people of access to critical commodities during a crisis. Some goods are too critical to America’s national and economic security to rely on foreign imports.

The NPRM recommends that price offers be enhanced to include key products and components identified under the critical Supply chain review as defined in E.O. 14017 and the pandemic supply chain strategy as defined in E.O. 14001. Once in place, these incentives will support the development and expansion of domestic supply chains for key products by providing a steady source of demand for domestically produced products.

③ Increase transparency and accountability under the Buy American Rule.

For decades, inadequate reporting has impeded the implementation of “Buy American” rules. Currently, contractors can only tell the government if the threshold is met, rather than reporting the full domestic content of their products.

The NPRM recommends establishing specific reporting requirements for key products. The new reporting requirements could strengthen compliance with the Buy American Act and improve data on the actual U.S. made content of goods purchased. More complete and accurate data will be used for future improvements to support America’s entrepreneurs, farmers, ranchers and workers, and create good jobs and resilient communities in the process.

During a visit to a manufacturing plant in Pennsylvania on Wednesday, U.S. President Joe Biden also said the new rules would provide more effective support for domestic industry.

During a tour of a Mack Trucking plant, Biden pointed out:

“In recent years, ‘Buy American’ has become an empty promise. My administration will make ‘Buy American’ a reality.”

Biden also offered examples:

“The federal government owns about 600,000 vehicles that don’t have parts that can be made in the United States. The same is true for other goods that the government buys.”

Mr. Biden’s recent trip has been dominated by visits to manufacturing sites, and his team is now pushing for a bipartisan infrastructure package in Congress. The bill would spend $1 trillion on roads and Bridges, transportation projects — which would include railroads and airports, electric vehicle charging facilities, broadband service expansion, and improvements to water, sewer and power systems.

Speaking in Pennsylvania, Biden praised the progress made by lawmakers. He said:

“I’m working with Democrats and Republicans to get this done, because while we disagree on many issues, I believe we should be able to work together on the things we agree on.”