The Trump administration's philosophy is quite simple—if we can build it, grow it, or make in the United States, we will. To this end, on Monday, President Donald Trump signed into law an executive order that will now require federal agencies to farm out their product purchases to those companies that use more American components.
This new order will only help to strengthen the current standards that all federal agencies must follow. These standards fall under the Buy American Act, which mandates a preference for goods that are American made.
According to the president, the order will see a gradual boost of the percentage of US components for the qualifying products that are American-made from 50 percent to as much as 75 percent. He went on to say that the threshold increase for such products as iron and steel would be that of 95 percent.
In response to Trump’s executive order, a trade group that represents the steel industry praised the move as “another positive step” to ensure that the steel industry can remain competitive. Thomas J Gibson, president, and CEO of the American Iron and Steel Institute stated that the overall health of the domestic-based steel economy relies on the strength of domestic procurement contracts from federally funded infrastructure-based projects.
Analysts pointed out the fact that the executive order will, in fact, require the government to pay a higher cost for many of the products involved. Bryan Riley, director of the conservative National Taxpayers Union's Free Trade Initiative, warns that the executive order may look good for the current administration on paper, but it will be the country's taxpayers that will be the ones who will truly be paying for the policy.
Dan Ikenson, director of trade studies at the libertarian Cato Institute, weighed in as well: "When we artificially reduce the pool of qualified suppliers or the variety of eligible supplies that can satisfy procurement requirements, projects cost more, take longer to complete, and suffer from lower quality.”
The president signed the executive order during the annual White House "Made in America" showcase, with representatives of manufacturers from all 50 states present. During his presidency, Trump and his administration have made it their priority and goal to boost manufacturing within the US. However, the continual growth of the nation's trade deficit has worked against this goal, in fact, increasing to an estimated decade-long high of $621 billion in 2018.
So, what’s the verdict—you decide.
Will Trump's executive order aid in turning the economy around?