President Joe Biden has made America’s manufacturing base a top priority; he has released a Buy American Executive Order since taking the oath of office and has set forward his proposal to expand the use of the Defense Development Act.
Although it is worth following the objective of stronger American manufacturing, a Buy American approach is sadly counterproductive. Instead, the Biden administration should concentrate on reshoring manufacturing capability to improve our supply chains in areas of greatest need, with a little support from our mates.
U.S. manufacturing capacities have decreased dramatically over the past 50 years as the nation moved into an information-age economy as manufacturing shifted overseas to lower-cost labour markets such as China. While great efficiencies have been generated by the global economic system, they have also contributed to dangerous vulnerabilities in the industrial base.
For instance, in the early weeks of the COVID-19 pandemic, U.S. reliance on Chinese companies for personal protective equipment (PPE) and pharmaceutical production came into sharp focus. Significant reliance on Chinese producers for rare-earth processing, microelectronics, small unmanned aerial vehicles and speciality chemicals was also reported in the 2017-2018 White House-led analysis of the defence industrial base. These cases indicate that, in sensitive areas, the U.S. does not have adequate domestic production capacity.
These concerns are not addressed by Buy American. For instance, a Buy American provision that narrowly failed would have required 100 per cent of Defense Dept. major acquisition programmes to be assembled and sourced in the U.S. by 2026 during last year’s negotiations over the 2021 National Defense Authorization Act.
This blanket technique is not useful. Thanks to current laws and regulations, the defence is already one of the country’s strongest manufacturing sectors; mandating new restrictions would have only minor benefits and, more significantly, would not solve the real problems facing the industrial base.
Besides, why would the Biden administration want to follow additional Buy American laws or regulations, particularly when improving relations with allies is one of its highest priorities?
Focusing on reshoring manufacturing capacities now focused on adversarial countries, primarily China, Biden would be better served. For instance, though more than $40 billion was forced to respond to a pandemic by September 2020, much more should certainly be done to safeguard our public health supply chain from Chinese vulnerabilities.