In April 2017, President Donald Trump signed an executive order meant to strengthen the Buy American Act. This new order supports efforts to buy American products and supplies when possible and to hire American workers when possible. This rule could have a tremendous impact on employers, especially those who work with the federal government, but how much of an effect this will have is not yet clear.
The Buy American Act of 1933
The concept of “Buy American” is not new. It was first passed into law with the Buy American Act of 1933, which, for the most part, gave U.S.-made goods preference over products made outside the U.S. The Act was aimed at federal projects and companies that entered into federal contracts.
The Trade Agreements Act of 1979, however, gave an essentially equal preference to goods from 60 other countries, meaning that the Buy American Act was not going to be enforced if a company bought products from one of the named countries. The Buy American Act itself had several exemptions that employers could take advantage of, too. The result was that companies didn’t really buy American if they could get a better deal elsewhere, as is seen easily in today’s economy and workforce.
The Buy American and Hire American Executive Order
Trump’s new order does not really change the Buy American Act itself, but rather the way it is interpreted and applied. Agencies that procure goods for the government now have to re-evaluate the law and send the president a report recommending changes. So the immediate impact on employers is nil, but that does not mean employers can assume nothing will change.
Confusion arose after the order was signed, especially in the steel industry. Because the order focuses on having the government re-evaluate the law and issue recommendations, no one really knows how much teeth the Act will get as a result.
For the steel industry, there is the additional concern that certain steel parts simply aren’t manufactured in the United States, and some recycled steel may contain steel of foreign origin. Forbidding the use of these products would create a massive disruption in the steel industry and any federal projects requiring steel. Without further guidelines on how far the government will go in enforcing U.S.-origin laws, industries aren’t sure how to proceed.
The Hire American Portion
The Buy American order also requires government employers to look at current hiring practices. This part of the order stems from the increase in H-1B visas for employees in the tech sector, who appear to be pushing out U.S. workers and lowering salaries for those U.S. workers who remain in the field. The idea behind re-evaluating this portion of the Act is to see how the government can increase the number of U.S. workers who are hired, thus increasing employment.
As with the purchasing rules, no one is sure how this will be enforced after the government releases its recommendations. For companies that tend to hire foreign workers, though, it would be a good idea to take another look at hiring practices and start shifting the applicant pool from foreign workers to U.S. workers. Consulting with a labor attorney who is tracking the Buy American and Hire American order is advisable because the rules could change suddenly.