President Biden is set to finalize a proposed new Buy American rule that will, eventually, require products purchased by the federal government with taxpayer money to consist of at least 75 percent of US-made materials. Clearly, this will have a huge effect on automakers and, at the same time, significantly boost American manufacturing and reduce dependence on imported materials. Semiconductor chips should immediately come to mind.
The federal government currently spends over $600 billion annually and is required to buy from American companies whenever possible. At present, 55 percent is the minimum threshold in order to qualify. Under the new policy, this will increase to 60 percent this October, 65 percent in January 2024, and 75 percent in January 2029. We’ve known this new policy was in the works as early as last July and now the details are coming out.