Well, it is just about time. In a recent push to aid domestic businesses and help revitalize the economy during the Coronavirus pandemic, an executive order was released, dubbed the ‘Made In America’ initiative, which revises an Act declaring that products purchased by the United States government should, whenever possible, be purchased from domestic manufacturers, among some other enormous changes.
This is an addendum to what is widely known as the ‘Buy American Act’, legislation instated in 1933 by President Herbert Hoover on his final day in office (what a way to go out swinging!). The original Act mandated that the U.S. government should preferentially treat domestic manufacturers for their purchases, with a few exceptions:
-If the foreign product is 25% less expensive than the domestic product
-If the foreign product is not available as a domestic product or if domestic manufacturers cannot meet demand for quantity
-If doing so is in the public’s best interest
In the almost ninety years since the original Act was passed, the world has changed. A lot. Manufacturing worldwide has been largely taken over by China, whose manufacturing sector produces a whopping $4 Trillion dollars of goods per year. The US punches in at $2.3 Trillion, so not too far behind. However, many American goods are capable of being manufactured in other countries, too, including those with less than savory track records about worker safety and wage protection. The result is a less expensive product than the one manufactured in America, where a rapidly growing standard of living is always pushing wages to increase. Since humane labor costs more, products tend to increase in price too.
The result of the original Buy American Act coupled with a rapidly globalizing world was that many partnerships were formed. Lots of goods were purchased, many of them from domestic businesses, but many from foreign partners, too. 15% of the entire U.S. GDP is made up of imports, demonstrating how widespread these items really are. In the context of government, the Buy American Act protected the interests of domestic businesses, but only so far.
One of the most exciting pieces of The Made In America initiative aims to close a loophole in the former Buy American Act where only 50% of the parts from purchased goods must originate in the states. These requirements were often waived without regard for domestic business, allowing contracts to be signed with foreign companies without any rebuttal from qualified American companies. In 2018, the U.S. Defense Department spent $3 billion on foreign construction contracts instead of American ones, and $300 million of foreign engines and vehicles. Those parts could have been made here, but they cost less elsewhere.
On the subject of waivers for foreign contracts, it should be made abundantly clear that foreign contracts went up 30% (emphasis here!) in the recent years, meaning that even more taxpayer money was being sent elsewhere as opposed to the American economy, where it is desperately needed. Under the Made In America initiative, (and this is actually rather comical in my opinion, just wait for it), if a company wants to try to have a contract waived, to buy abroad, a committee will review the contracts to determine whether or not the same products can be found domestically, and if the company then insists on following through with a foreign purchase, in order to get the waiver signed, they have to show up to the White House and make their case! I really cannot stop chuckling at this, imagining the businessmen standing in a line, waiting to be scolded like schoolchildren for their refusal to buy American parts.
In this same regard, the Made In America initiative is partaking in something revolutionary, and in my own personal opinion, long overdue. There will be a public directory available that documents all waived purchases and goods required for the government. When a waiver is requested to buy cheap foreign parts, it will be made public! Who is buying what and where they are buying from will all be available for American businesses to peruse and decide whether they are capable of filling that piece of the logistical chain. Time will need to pass to see how well this works, but to me, this seems like a fantastic move. The words ‘government’ and ‘transparency’ very rarely go hand-in-hand, but this could be the start to something truly groundbreaking.
Another major focus will be placed on replenishing national stockpiles. In the era of the coronavirus pandemic, it has become abundantly clear that the United States is in fact quite unprepared to deal with crises within its borders due to over-reliance on foreign manufacturers for Personal Protective Equipment (PPE), such as masks, face-shields, gowns, and gloves, and other essential products and supplies. The move towards domestic manufacturing for such items means no more hoping and waiting for shipments to arrive from affected countries during a pandemic, no more uncertainty as to whether or not our doctors and nurses will be protected while risking their lives for ours. In addition, the U.S. will work closely with their allies to ensure that those countries also have resilient, sufficient supply chains. What does this mean for us? It is a great time to start a mask manufacturing company, that is for sure.
Finally, in addition to all of the aforementioned changes, hundreds of billions of dollars will be focused into revitalizing American infrastructure, another incredibly overdue systematic revolution. The aim is to make America stronger, more competitive, in a world where its once razor-sharp edge was beginning to dull. This money will fund countless new jobs, strengthen existing ones, and create a more efficient economy which in turn expends less raw materials. Faster, stronger, cleaner.
The Made In America initiative will also fund hundreds of billions of dollars in research and development for competitive global markets, such as battery technology, artificial intelligence, biotechnology and clean energy. This investment will push America’s development to new heights in the hopes of competing in an already crowded global market. In direct relation to these fields of study, this initiative will also include a complete overhaul of the national fleet, replacing all of the vehicles with American-made electric, net-zero emissions versions. Time to invest in electric vehicles? Go do the research yourself, but the signs are there.
“The Future Will Be Made In America” is the slogan of this initiative, and quite a compelling one, if you ask me. If these changes are kept, this will be a massive boon for the U.S. economy. The tax money being taken from hardworking Americans will find its way back into the system, creating jobs, wealth, and increasing the one aspect of American life that brings people from far and wide to settle here: opportunity.
The future is waiting. It is about time that we focus on making it happen in America.