US trade updates
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Joe Biden is planning to sharply increase domestic content requirements for products sold to the federal government, reinforcing his “Buy American” push ahead of a visit to a blue-collar community in Pennsylvania.
The proposal will help the White House bolster its efforts to address supply chain vulnerabilities that emerged during the coronavirus pandemic, which triggered problematic bottlenecks.
But it risks unnerving international suppliers to the US government and could raise tensions with allies including Canada and in Europe that have long resisted Washington’s attempts to tighten procurement rules.
The president’s plan, which has to go through a public comment period before it is implemented, would raise the threshold for products to qualify for the domestic content requirement under US law.
Under existing rules, products can pass muster if 55 per cent of the value of their components is manufactured in the US. But the White House wants to lift that mark to 60 per cent and phase in further increases to 75 per cent over the next eight years.
“This proposal would close a problematic loophole in the current regulation, while also allowing businesses time to adjust their supply chains to increase the use of American-made components,” a White House fact sheet said.
Biden is expected to promote the proposal during a trip to Lower Macungie Township in Pennsylvania’s Lehigh Valley on Wednesday afternoon. The White House said the president would “emphasise the importance of American manufacturing, buying products made in America, and supporting good-paying jobs for American workers”.
The proposal also includes a measure to deliver “a source of stable demand” for domestic producers of critical goods through new price preferences, essentially special incentives to keep supplying the government.
Biden made domestic procurement a cornerstone of his 2020 presidential campaign, particularly in the industrial Midwest and the rustbelt, as he sought to win back voters who had flocked to Donald Trump on the back of the former president’s protectionist economic message.
In January, shortly after he took office, Biden signed an executive order to boost domestic procurement, which the new rules will build on. An administration official said the proposal would have no effect on the country’s “trade obligations”, but officials and executives from US trading partners have in the past raised concerns that “Buy American” provisions were discriminatory and aimed at cutting out international competition.
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