Buying U.S.-made products comes with a hefty price tag, and provisions to make them here shouldn't be expanded, economists argue in a new paper.
In a September report for the National Bureau for Economic Research titled "The Increasing Cost of Buying American," economists Matilde Bombardini, Andres Gonzalez-Lira, Bingjing Li, and Chiara Motta measured the costs and benefits of Buy American provisions, which have been implemented by both the Biden and Trump administrations.
The four found that existing federal rules impose higher costs on consumers.
The Buy American Act, which requires the federal government to buy domestic "articles, materials, and supplies" when they're acquired for public use, was passed by Congress in 1993.
The legislation has created more than 50,000 jobs but has cost the economy $111,500 to $137,700 per job.
Furthermore, "the recently announced tightening of the policy on the use of foreign inputs will create fewer jobs at a higher cost of $154,000 to $237,800 per job. We also find scant evidence of the use of Buy American rules as an effective industrial policy," the economists wrote.
"The higher cost arises from two main factors: First, the newly protected sectors that compete with foreign intermediate inputs tend to have a lower labor share relative to sectors protected by final goods restrictions. Second, the regions most affected by the rise in input costs are those with a high concentration of government procurement, leading to increased public goods procurement costs," the researchers wrote.
Solange Reyner ✉
Solange Reyner is a writer and editor for Newsmax. She has more than 15 years in the journalism industry reporting and covering news, sports and politics.
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