Perhaps adding protectionist measures to a bill ostensibly aimed at improving U.S. infrastructure wasn’t the best idea.
Contained in last year’s Infrastructure Investment and Jobs Act was the Build America, Buy America Act (BABA) requiring the use of U.S.-made iron, steel, construction materials, and manufactured products in federally funded infrastructure projects. But with BABA’s restrictions set to take effect this month, the Department of Transportation (DOT) has
announced that the mandated use of U.S. construction materials will now be waived for 180 days.
Given the Biden administration’s
enthusiasm for Buy America protectionism, it seems unlikely this is a decision the DOT came to lightly. That it nonetheless proceeded appears due to the feedback received following the publication of a
DOT notice seeking comment on such a waiver. As the DOT notes, the “vast majority” of responses supported such a move while opposition was found mainly among “certain manufacturers and labor organizations.”
This is exactly as one would expect. The relatively small number of groups that benefit from Buy America’s limits on competition are staunchly opposed to waivers while the far greater number of those who must bear its increased costs are much more welcoming of such a move.
Notably, however, the DOT makes clear the waiver was issued not due to cost considerations but the added difficulty of complying with Buy America requirements. Indeed, some groups believe even an extra 180 days is far from adequate.
A letter from the American Association of State Highway and Transportation Officials, for example, states that it anticipates the Federal Highway Administration “will need at least 12 months to work with state DOTs to solicit comments and address definitions, processes, and certifications necessary” to meet the requirements while the group estimates “the construction industry and supply chain will need at least 24 months to establish additional sources for the mass production of domestic manufactured products and construction materials.” The American Public Transportation Association, meanwhile,
called for a
four‐year waiver to provide sufficient time to adopt new rules and processes.
The extra red tape alone makes Buy America a doozy.
Frustratingly, all of this was perfectly predictable. Indeed, my colleague Scott Lincicome
warned of candidate Joe Biden’s embrace of domestic content requirements back in July 2020, pointing out that previous efforts to bolster infrastructure via the $787 billion stimulus package passed in 2009 were similarly undermined by protectionist mandates that caused delays, higher costs, and roiled trade relations (
sounds familiar!). For those paying attention, the latest Buy America headaches are no doubt a source of déjà vu (as is
commonly the case with protectionism).
Waivers from this self‐defeating policy are welcome and a tacit recognition of the harm caused by such policies, but should only be a prelude to repeal.
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