The United States Government is the largest single purchaser of goods and services in the world, spending over $550 Billion dollars a year. It has long been the policy of the United States to purchase buy American. Indeed, the Buy American Act, which promotes domestic purchasing of goods and services, was signed into law in 1933.
Yet, there has been a lot of recent Presidential Executive Orders directed to this same goal. For example, between January 31, 2019 and January 14, 2021, President Trump signed Executive Orders related to strengthening buy-American preferences for infrastructure projects, maximizing use of American-made goods, products, and materials, and encouraging buy American policies for the U.S. Postal Service. Within the first week of President Biden’s administration, he too signed an Executive Order on “ensuring the future is made in all of America by all of America’s workers.”
The problem these orders are trying to fix is that while the law and preference is to buy American, the Buy American Act allows for various exceptions, including when domestic items are not available at a reasonable cost or where trade agreements waive this requirement. There are also several loopholes, like what it even means to buy American. For example, in an effort to prevent companies from importing largely foreign-made goods and selling them as American made after minor assembly or making minor tweaks, Biden’s executive order orders federal agencies to reevaluate the thresholds used to determine U.S. content. Regardless of what impact this has on trade and the Government’s spending, the Government’s decision could impact what “made in America” means. If your company uses “made in America” or similar slogans on their products or in their advertising campaigns, it may be wise to pay attention. A legal statement today may by the subject of a false advertising claim tomorrow.