Does “Buy American” Really Work?
At first glance, President Trump’s recently signed executive order “Buy American, Hire American” may sound like a good idea. Forcing companies to hire American workers and spend their dollars on American products should logically boost the economy right? If we dig deeper, one can argue there are problems with this strategy.
The Global Economy
At the heart of a global economy is the ability for domestic companies to source the best and least expensive products while passing on those savings to customers. According to economists and even Trump campaign adviser Stephen Moore, if competition is eliminated and the pool of suppliers is reduced, products become more costly and quality suffers. As Moore told Wolf Blitzer on CNN, calling it a “hidden tax”…” “Who’s going to bear the burden of that? The consumers. And you’re right. You get an A in economics because that’s actually a regressive tax on the lowest income.”
Studies indicate consumers believe American made products are of higher quality. Their actual purchasing habits, however, reveal that price is the major motivator. An Associated Press-GFK poll in 2016 found about 75% prefer American products but their first choice is the best price.
What Happens Now?
Sure this sounds like a big deal. In reality the order may not have any teeth as it only requires agencies who oversee this sort of thing to assess compliance under existing laws. Since this order lacks any real enforcement guidelines nothing meaningful will probably happen. But it sounds good right?