


I can’t say for sure, but I’m guessing that “drywall” was never an applause line in a State of the Union address before this week. Democrats leaped to their feet, and a good number of Republicans joined them when President Biden said, “When we do these projects — and again, I get criticized for this, but I make no excuses for it — we’re going to buy American. We’re going to buy American.” As the applause energized him, he added, “I mean it! Lumber! Glass! Drywall! Fiber-optic cables!”
Biden was talking about the Buy American Act of 1933, which requires federal agencies to buy domestic products and materials except when their acquisition is judged to be “inconsistent with the public interest or their cost to be unreasonable.” (Eligible products are treated as domestic under a 1979 law if they come from countries that have trade deals with the United States or are members of the World Trade Organization’s government procurement agreement.) Biden told Congress that past administrations have found ways to get around the Buy American Act. “Not anymore,” he vowed, to applause.
As you’d expect for a 90-year-old law, the Buy American Act is encrusted with interpretations and exemptions. There are other domestic content rules such as the Berry Amendment, which applies to Pentagon procurement. Over the years, the government has issued plentiful waivers in tacit recognition that buying some stuff in the United States would be prohibitively expensive. Biden isn’t entirely happy with those. A White House fact sheet brags of a new rule, which took effect in October, that to count as domestic, a product must have at least 60 percent domestic parts, up from the previous threshold of 55 percent, “as the first step toward increasing that value to 75 percent.”
To me, something is out of whack in Washington when there’s bipartisan agreement that the federal government should buy products that are made in the United States even if they’re more expensive, even if they aren’t as good and even if the imported versions pose no national security concerns.
If the American-made products were cheaper, better or both, there would be no need to force agencies to buy them. They’d be the natural choice. So either the requirement is harmful to the customers in the federal government and, by extension, taxpayers, or it’s superfluous.
As for national security, there are other laws that stop Americans from buying, say, gallium arsenide integrated circuits for military purposes from potential adversaries such as China. That’s not what Biden is talking about here, though. You have to have a vivid imagination to see a national security threat from imported lumber, glass, drywall or optical fibers. (The electronics in fiber optic cables are a potential concern.)
Another argument you sometimes hear is that imports aren’t safe. Sometimes that’s true: Contaminated Chinese-made drywall that was used in the 2000s caused a rotten egg smell and corroded metal in thousands of newly built homes, particularly in Florida. But the answer to that is testing and inspection, not blanket import restrictions.
What about jobs, though? Won’t buy-American rules create more jobs in the United States? Two thoughts on that. First, the U.S. unemployment rate in January was 3.4 percent, the lowest since 1969. In the short term, America’s factories could not handle a huge increase in demand caused by suddenly ending waivers of the Buy American Act. There are not enough workers to spare.
In the long run, the economy could be restructured, if necessary, to divert more people into making products such as lumber and drywall. But those are not particularly desirable jobs. The median wage for production occupations in sawmills and wood preservation was $17.76 an hour in 2021, according to the Bureau of Labor Statistics.
While China is upgrading its factories and work force to the jobs of the future, it doesn’t make sense for the United States to shelter relatively low-tech industries. After the Trump administration put tariffs on apparel and footwear, imports of those products from China fell sharply, according to a study by importers released last month. But the tariffs probably hurt American consumers more than they hurt China, which was happily handing off those low-wage industries to the likes of Vietnam and India.
To its credit, the Biden administration is also focused on high-wage, high-growth sectors that are vital to national security, as signified by the CHIPS and Science Act. “Unlike oil, which can be bought from many countries, our production of computing power depends fundamentally on a series of choke points: tools, chemicals and software that often are produced by a handful of companies — and sometimes only by one,” Chris Miller writes in a new book, “Chip War: The Fight for the World’s Most Critical Technology.”
But even Miller doesn’t argue that national security dictates a buy-American strategy in the chip sector. In an email to me, he wrote: “For advanced manufacturing capabilities like chip making, it is common to source components from dozens of different countries. So ‘buy American’ is often simply impossible.” He added: “The efficiencies produced by international supply chains have been critical in driving technological progress. There’s plenty of reason to question excessive reliance on trade with geopolitical rivals, but when it comes to allies like Japan or Europe, I don’t see any justification for buy-American provisions.”
To be sure, there are no buy-American provisions in the CHIPS and Science Act in recognition of the global nature of leading-edge semiconductor technology. Biden’s rhetoric is hotter than his actual policies. The Inflation Reduction Act relies on carrots in the form of tax breaks rather than sticks to encourage domestic sourcing. The bipartisan infrastructure law has a waiver procedure that allows many foreign companies to supply U.S. customers. Still, Biden has kept in place Donald Trump’s tariffs on China, and now Biden is promising to be more aggressive in enforcing the 1933 law than his predecessors were.
Robert Atkinson, who advocates investment in U.S. technology as president of the Information Technology & Innovation Foundation, told me that buy-American provisions are like a shotgun, not the rifle the United States needs. A study by his organization concluded that insisting on American sourcing for tech products such as high-speed internet service to homes would raise prices by 20 to 25 percent. “Are you willing to pay for that?” he asked. “You will have less deployment. It’s this blunderbuss approach that I think is wrongheaded.”
Both Miller and Atkinson advocate friendshoring of critical parts, which is switching to suppliers based in nations that are reliable allies. That’s economically efficient, since it’s been known since the time of Adam Smith and David Ricardo that everyone wins when countries specialize in what they’re best at rather than erect protectionist barriers and try to do everything alone. Henry George, the great 19th-century economist, wrote, “What protection teaches us is to do to ourselves in time of peace what enemies seek to do to us in time of war.”
Friendshoring is also a diplomatic winner. I interviewed Mary Ng, Canada’s minister of international trade, export promotion, small business and economic development. She said she was in the room when Biden met with her prime minister, Justin Trudeau, last month in Mexico City. “We understand what the American president is trying to do on jobs,” she said. “We have to keep doing the work to remind the Americans that we share values and that working together allows us to be more competitive, versus others that may not share those values.”
These are not new arguments. Clearly, though, judging from the standing ovation Biden got this week, a lot of people in Washington aren’t persuaded by them. I asked Douglas Irwin, a Dartmouth College economist who wrote a book titled “Free Trade Under Fire,” whether he’s hopeful for free trade. “Not really,” he said. “The old center has lost ground.” It will probably take evidence of substantial harm from protectionism to get people to change their minds about it, he said.
The Readers Write
Instead of running a reader email today, I’m sharing responses to my request for examples of big projects that ran over budget, were late or encountered other problems. Many readers mentioned California High Speed Rail. Other nominees, which I didn’t attempt to vet, included the Honolulu rail transit project, the Boeing KC-46 aerial tanker, the luggage-handling system at Denver International Airport, the U.S.S. Monitor ironclad ship, Michigan’s Zilwaukee Bridge, the Navy’s littoral combat ships, the eastern span of the San Francisco-Oakland Bay Bridge, the Coca Codo Sinclair Dam project in Ecuador, New York City’s Grand Central Madison rail connection, Germany’s THTR-300 nuclear reactor, the Channel Tunnel, the Airbus A380, Seattle’s Alaskan Way Viaduct replacement tunnel, Rhode Island’s Jamestown Bridge, the Sydney Opera House in Australia, Canada’s Phoenix pay system, Maryland’s Purple Line train, California’s Sonoma-Marin Area Rail Transit, British Columbia’s high-speed catamaran ferries and the Syn-crete highway project in Utah’s Salt Lake County. Thanks for all the ideas.
Quote of the Day
“In postindustrial societies where mass production and media predominate, life is presented as an immense accumulation of spectacles. Everything that was directly experienced has been replaced with its representation in the form of images.”
— Guy Debord, “The Society of the Spectacle” (1967), annotated English translation by Ron Adams (2021)
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