Trump Issues New 'Buy American' Directive for Infrastructure Projects
FHWA is assessing directive's impact on federal-aid highway program
President Trump has signed a new executive order that aims to apply “Buy American” preferences for infrastructure projects to more types of materials and to projects involving a broader range of types of federal financial aid than an earlier directive did.
But it wasn’t immediately clear how the new executive order, which Trump signed on Jan. 31, will apply to the largest federally funded infrastructure program, federal-aid highways. Such highway work is covered by a different preference program called Buy America, which was established by federal statute. The Federal Highway Administration says that it is looking into the issue.
Industry officials have been poring over the executive order to try to figure out whether, or how, it might affect the federal-aid highway program.
Brian Deery, senior director of the Associated General Contractors of America’s highway and transportation division, said in a Jan. 31 interview after the executive order was issued, “We’re still examining what the implications are.”
Rich Juliano, American Road & Transportation Builders Association senior vice president for policy, said in a Feb. 1 interview that he continues to look at the issue,"as are many of my colleagues here and elsewhere." Juliano adds, "We're going to need [U.S.Dept. of Transportation] to give us their interpretation of this [new directive], in terms of how they see this applying to the federal-aid programs, if at all."
A FHWA spokesman said in a Feb. 5 email to ENR, "An assessment of the 'Buy American' executive order and its implications for the federai-aid highway program is still underway."
The executive order covers a wide variety of infrastructure types beyond highways, including airports, energy, water and ports. It is a follow-on to a Buy American directive that Trump issued in April 2017. That document focused largely on reducing federal agencies’ use of waivers of the domestic-preference policy to allow the use of foreign materials. Some administration officials felt agencies had used waivers too frequently.
The new executive order goes further than the earlier one, by having Buy American policy apply in cases where “federal financial assistance” is used. That phrase replaces the 2017 document’s term “federal grants.”
Peter Navarro, assistant to the president for trade and manufacturing policy, told reporters in a Jan. 31 briefing that federal financial assistance refers not just to grants, but also to loans, loan guarantees, insurance and interest subsidies.
He said that in fiscal year 2016, Buy American didn’t apply to more than $45 billion in federally assisted infrastructure projects.
Speaking at the White House before signing the directive, Trump said, “We want American roads, bridges, and railways and everything else to be built with American iron, American steel, American concrete and American hands.”
Strictly speaking, the directive isn’t a mandate. It says that agency heads shall “encourage” entities that receive federal assistance for infrastructure projects “to use, to the greatest extent practicable,” U.S.-made steel, iron, cement, aluminum and manufactured products.
The federal highway Buy America program, established in the 1982 surface-transportation law, applies only to “steel, iron and manufactured products.” Unlike the highway program, the two Trump Buy American executive orders don’t carry the force of law.
There is, however, a 1933 Buy American law, enacted at the end of the Hoover administration, but that statute "primarly deals with direct procurement of the federal government," such when the government purchases construction materials, says ARTBA's Juliano.
Federal-aid highway funding totals more than $40 billion, the vast majority of which flows to states, not as direct grants, but as reimbursements for funding they have committed to projects.
Navarro said the Buy American policy wouldn’t result in increased costs for steel customers. He asserted that when new steel capacity is put in place, “over time…you will see steel prices again begin to moderate and go back down.”
Deery notes that the new directive does add cement to the types of materials to which the White House's policy applies.
The American Iron and Steel Institute praised the new executive order. The group’s president and chief executive officer, Thomas J. Gibson, said in a statement, “Strong domestic procurement preferences for federally funded infrastructure projects are vital to the health of the domestic steel industry, and have helped create manufacturing jobs and build American infrastructure.”
Story updated on Feb. 2 with comments from American Road & Transportation Builders Association and reference to 1933 Buy American act.