WASHINGTON — It will soon take more U.S.-made parts to label something “Made in America,” under final rules to be released by the Biden administration Friday.
The federal government spends more than $600 billion annually, and it is required to buy from American contractors and manufacturers when possible.
But the policy only requires products bought with taxpayer dollars to contain at least 55% U.S.-made parts to qualify. The final rule to be announced Friday will raise that number to 60% in October this year, 65% in January 2024 and 75% in January 2029, according to administration officials. The president issued a proposed rule with similar proposed changes last July.
The administration hopes the increased requirements will push manufacturers to source more products within the U.S., re-shoring supply chains that have become increasingly globalized over recent decades, said two senior administration officials who spoke to reporters Thursday on condition of anonymity.
The rule also applies enhanced price preferences — a percentage added to foreign contractors’ offers when determining the lowest price — for critical products identified by the administration such as electric vehicle batteries and minerals, pharmaceuticals, and semiconductor chips to incentivize domestic production.
A full list of critical products would be identified in a separate rule-making process, though the focus will be on components that “will be critical to America’s economic security and national security,” a senior administration official told reporters Thursday.
President Joe Biden is also scheduled Friday to tout a new investment alongside the CEO of Siemens USA, which plans to spend $54 million to expand electrical infrastructure, which the White House says will support electric vehicle chargers, data centers, industrial sites and more.
Shortly after coming into office, Biden asked the administration to identify ways to strengthen the Buy American rules. Former President Donald Trump also issued executive orders that affected the act, including one that pushed to raise that threshold to 95% for iron and steel products and from 50% to 55% for other products.
Tens of billions of federal dollars have gone to foreign companies, Biden said when announcing the proposed rule, including $3 billion in defense funding on foreign construction contracts in 2018 and $300 million on foreign engines and vehicles.
The new requirements may prove complicated for U.S. automakers. Vehicles made by U.S.-based automakers usually contain more parts made in the U.S. than automakers based in foreign countries, according to the National Highway Traffic Safety Administration.
But not always — Japan-based Honda Motor Co., for example, is high on the list of automakers using U.S.-made parts. And many American automakers use a significant percentage of parts sourced from other countries.
The National Association of Manufacturers, Ford Motor Co. and General Motors Co. praised the administration’s efforts to bolster U.S. manufacturing by reviewing Buy American rules last year.