Hurdles in supply chain remain as US raises its ‘Buy American’ threshold for government purchases
- Manufactured products bought by the federal government must have a certain percentage of domestically sourced components, which can be a challenge to ensure
- ‘It can be very difficult to know where all the components for a particular part might have originated or passed through as they move through the supply chain’
In an effort to shore up supply chains critical to national security, the United States has increased the threshold for American-made content in federal purchases – a scheduled change that targets mainland China.
The Buy American Act, which was finalised in March and based on an executive order signed by President Joe Biden during his first week in office, requires all manufactured products bought by the federal government to have a certain level of domestically sourced components. On Tuesday, the former limit of 55 per cent will rise to 60 per cent, and by 2029 it is scheduled to increase to 75 per cent.
Joshua Rodman of Sandler, Travis and Rosenberg, a Washington-based law firm, said the requirement would affect “electronics, defence and other industries which are assembly/manufacture intensive and provide customised or specialised” products.
The change comes as alarms have been sounded over the reliance of US military supply chains on countries like China and Russia, and amid reports of US plans to “co-produce” weapons with Taiwan, a self-rule island that China claims as its own. The Pentagon has neither confirmed nor denied those reports.
03:13
Xi warns Biden that US ‘playing with fire’ as tensions soar over Pelosi’s proposed Taiwan visit
Tensions remain high between the two countries as the Biden administration has banned China’s access to US semiconductor technology and identified the Asian giant as a “threat” in its new National Security Strategy.
