President Biden proposed Wednesday raising the domestic content requirement for a product to be considered “American-made” when purchased by the federal government.
In what the White House hails as the biggest “Buy American” push in almost 70 years, the proposal would require that at least 60% of a product’s components be produced domestically to qualify as “Made in the U.S.”
That threshold would then be increased to 75% in incremental stages by 2029.
Mr. Biden has also proposed changing the reporting requirements to force government contractors to disclose the percentage of domestic content in their products. Currently, contractors are only required to tell the government whether they meet the content threshold.
The thinking is the rule change will strengthen data on how many U.S. components are used in goods purchased by the federal government.
The moves also would enable the U.S. to bolster its domestic supply chain after the coronavirus pandemic exposed gaps that left health care workers scrambling for protective equipment.
If approved, the proposal would apply to almost anything purchased by the federal government from helicopter blades to office furniture.
By tightening the domestic-content rules, the Biden administration would give automobile manufacturers a big boost, as Mr. Biden has sought to replace the government’s fleet of nearly 650,000 cars and trucks with electric vehicles, one of his infrastructure package proposals.
The federal government spends as much as $600 billion annually on contracts, but a significant portion of that goes to foreign businesses, said Public Citizen, a nonprofit watchdog organization.
It is unclear how much federal contracting goes to foreign countries because some of the funds go to overseas subsidiaries of American corporations, Public Citizen said in a report earlier this year.
The U.S. government has been more receptive to foreign contractors than other nations, according to information from the General Accounting Office.
In 2010, the most recent year available, foreign companies bid on 48% of U.S. government contracts, while the European Union, Japan, South Korea, Norway and Canada allowed only a combined 16% of contracts to be bid on by overseas businesses.
An administration official told reporters in a background call that the proposed measures will ensure U.S. tax dollars help American businesses compete.
The official said the changes will “accelerate innovation” for American businesses.
“We’ll buy from all Americans, including minority entrepreneurs and businesses in every region of our country, and generate more union jobs,” the official said.
Mr. Biden is expected to highlight the proposals during a visit to the Mack Truck plant in Lower Macungie Township, Pennsylvania.
Shortly before leaving office, President Trump toughened the domestic content threshold. Mr. Trump raised the threshold to 55% for manufactured goods and 95% for iron and steel, up from 50% previously on all items.
He also increased how much more government agencies could pay for domestic products over foreign ones to give U.S. manufacturers an edge.
Mr. Trump had pushed for more aggressive provisions, but his plans hit a snag when other officials argued his proposals could risk backlash from foreign nations and increase costs to U.S. taxpayers.
The Biden administration official dismissed concerns they could also run afoul of foreign trading partners, saying the proposed changes won’t affect products inconsistent with Buy American rules.
Still, Mr. Biden has already faced foreign opposition to his previous Buy American initiatives.
In January, after he signed an executive order forcing the federal government to buy more U.S. products, some allies expressed concern to the president. Canadian Prime Minister Justin Trudeau raised his concerns about the loss of lucrative contracts in a phone call with Mr. Biden, according to media reports at the time.