From day one of his presidency, President Biden has focused on increasing manufacturing and supply chain jobs in the United States. His goal is to expand manufacturing so the United States can compete with other industrialized nations in the 21st century.
Since he began the push to invest in domestic manufacturing at the beginning of 2021, employers have added 375,000 jobs, the most since Bill Clinton was president in 1992.
Requirements for Federally Procured Goods
The White House announced the requirements for federally procured goods to keep the economy moving and recover from the pandemic. The Biden administration wants the government to procure more goods from domestic manufacturers and supply chains rather than purchasing from companies in other countries. The goal is to boost American manufacturing.
The new standards will include a requirement that 60 percent of goods purchased by the federal government must be made in the United States. Before this increase, the Buy American Act required that 55 percent of goods must be made in America.
The White House Made-in-America Office reported the administration is working hard to leverage the federal government’s purchasing power so it benefits American workers. During the 2022 fiscal year, the federal government spent $6.27 trillion on goods, services, and programs.
Because of required federal spending, it’s easy to see how its purchasing power can benefit American manufacturers and their workers. When companies have to fulfill government contracts, they hire more workers to fill their good-paying jobs. Other companies have to fill their supplies, thus creating more jobs.
Impact on American Manufacturers and Supply Chains
As the United States government increases its requirement for purchasing from American companies, it buys fewer goods and services from foreign companies. This system also benefits American companies because it reduces the government’s reliance on foreign supply chains.
The Biden administration strengthened the Buy American Act requirements earlier in 2022. The federal government must spend money each year, and the administration heavily focused on reducing the money going to companies in other countries – especially China.
Increasing the Purchasing Thresholds by 2029
By 2029, the Buy American Act will require the federal government to purchase 75 percent of its goods from domestic companies. Over the next seven years, the federal government will increase its domestic content threshold by 20 percent. This gives innovators more time to build manufacturing centers and create more supply chains.
In 2024, the threshold will increase to 65 percent before reaching 75 percent five years later.
Communicating with Executive Orders and Memos
To support American manufacturing and supply chains, President Biden signed Executive Order 14005. His order created the new Made in America Office. When the president made the recent changes, the White House Office of Management and Budget sent a memo instructing agencies about the increased requirements to purchase more goods from American companies.