Protectionist History Repeats, Again

By Scott Lincicome of Cato. 

"A couple years ago, I took to this blog to remind then‐​candidate Joe Biden of the numerous problems that “Buy American” laws, which require U.S.-origin materials in federal procurement projects, caused back when he was vice president and overseeing implementation of the 2009 American Recovery and Reinvestment Act’s infrastructure projects. Taxpayer costs were high; projects were delayed (if not scuttled); and uncertainty reigned, eliciting numerous complaints from American companies and local officials trying to carry out the federal government’s plans.

My warning, unfortunately, was ignored by now‐​President Biden, who has repeatedly trumpeted his efforts to insert Buy American mandates into major pieces of legislation and to tighten existing local content restrictions by executive order. But, as detailed in a recent Route 50 piece, his brushoff hasn’t stopped history from repeating itself:

The Biden administration is pushing state transportation departments and their contractors to use more U.S.-made materials as they build new infrastructure, but many industry groups worry the federal government is rolling out the changes too quickly.

“AASHTO is still concerned that the quick implementation of Buy America requirements for such a broad range of materials will cause delays in project delivery while states, contractors, manufacturers, and suppliers continue working to determine how best to track and verify these materials,” wrote Roger Millar, Washington state’s secretary of transportation and the president of the American Association of State Highway and Transportation Officials, in a letter to federal officials.

“Delays and costs will likely increase, at least in the short term, as contractors are forced to shift material purchases to domestic suppliers, who in turn may struggle with availability due to limited quantities and high demand,” he added.

AASHTO isn’t the only group complaining. The American Public Transportation Association, which represents transit agencies, recently told the Biden administration that, “[g]iven the current supply chain constraints, moving to all U.S.-sourced construction materials will inevitably lead to project sponsors paying a premium to meet [Buy American] requirements. The question then becomes whether the market/​industry can absorb a doubling, tripling or even a quadrupling of costs for construction materials.”

Given cost, timing, and other practical considerations, transportation agencies from numerous states, including North Carolina, Idaho, Montana, North Dakota, South Dakota, and Wyoming, have asked for a broad waiver from the Buy American mandates. The latter five recently explained that strict Buy American rules would jeopardize federal projects and, in turn, their local economies:

As relatively rural states that may be considered ‘small market’ by vendors of some materials and products, we are particularly concerned that the burden of an absence of waivers could fall heavily on us, as scarce Buy America qualified products tend to be sent to more populous areas…

The blow to program delivery, local jobs, and transportation benefits that would entail could well be magnified by the short construction season in our northern, high elevation states – where even short delays and project disruptions can push project completion into the “next construction season.”

The Airports Council International – North America echoed these sentiments, noting that denying its members a broad‐​based waiver “is short‐​sighted and unnecessarily risks reducing the number of airport construction projects and associated U.S. construction jobs.”

If only someone could’ve warned us."