Canadian Manufacturers Face a New Buy American Policy on Construction Materials

Once again, the Canadian Manufacturers face a risk of being hit by U.S. Protectionism and need to fight for necessary exemptions. Challenges were raised after the Biden Administration announced new procurement guidance Monday that requires the construction material purchased for federally-funded infrastructure projects to be produced in the U.S. The Head of Canadian Manufacturers and Exporters, Dennis Darby, says Canada will have to work hard to secure carve-outs and waivers to protect access to the U.S. market, as it has done in the previous challenges. U.S. President Joe Biden lifted the veil Wednesday on a broad and ambitious $2 trillion in infrastructure spending. However, Canadian businesses, contractors, and suppliers were left still wondering if they would be able to share in the benefaction.

Stakeholders, well familiar with Biden’s campaign-trail promises to impose more rigid “Buy American” rules for government contracts, are still waiting to learn how stringently those restrictions will be enforced. Key to those efforts will be emphasizing the integrated nature of the economies, where materials already flow freely across the border, and how Canada is rarely in a position to undercut U.S. prices. Darby says the U.S. provisions are more targeted toward countries like China, where there are concerns about subsidized production and the exporting of products at low prices.

The Buy American rules, part of the US$1-trillion infrastructure package passed into law last November, allow for several scenarios in which the requirements could be waived, including if they’re inconsistent with public interest or if the materials aren’t produced in sufficient quantities or quality domestically. “There will be additional opportunities for good jobs in the manufacturing sector,” said Celeste Drake, director of Made in America at the White House Office of Management and Budget. “And as we’re looking at boosting American content, big corporations are going to create opportunities for small and medium-sized enterprises in the U.S. as supply chains are partially re-shored to try to meet the content standards.”
Biden faces inflation at a 40-year high. He is betting that domestic production will ultimately reduce price pressures, a response to Republican attacks that his $1.9 trillion coronavirus relief package initially triggered higher prices.

“From Day One, every action I’ve taken to rebuild our economy has been guided by one principle: Made in America,” Biden said on Apr. 14 in Greensboro, North Carolina. “It takes a federal government that doesn’t just give lip service to buying American but takes action.”
Biden said that the roughly $700 billion the government devotes annually to procuring goods is supposed to prioritize U.S. suppliers. Still, regulations going back to the 1930s have been watered down in ways that masked imports use. The new guidelines would let government officials know how many dollars go to U.S. workers and factories. American manufacturers are about 170,000 jobs short of the 12.8 million factory jobs held in 2019, as manufacturing jobs declined before the pandemic began. But the U.S. has 6.9 million fewer manufacturing jobs than at the 1979 peak, a loss caused by outsourcing and automation.