‘Buy American’ plan will not help US workers



Financial Times

One of Joe Biden’s first acts as US president has been a continuation of a bad policy of his predecessor, Donald Trump, not a break with it. He has signed an executive order that doubles down on Mr Trump’s “Buy American” rules for federal government procurement. This is a mistake, even if made for an understandable political reason.

Mr Biden wants his presidency to restore the status and wellbeing of ordinary workers, many of whom supported Mr Trump, after suffering the sharp end of automation, globalisation and economic change, for decades. That is a noble agenda. But it does not justify this sort of crude protectionism.

All protection is a tax on consumers of the protected products, for the benefit of their producers. There is rarely good reason to expect these gains to go to ordinary workers. A good portion of them will go to shareholders and managers. Meanwhile, the costs will fall on buyers. In this case, that buyer is the government, which will end up wasting scarce fiscal resources on unnecessarily expensive goods and services.

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