Are you in compliance?
Most of our customers are in the United States. Although Canada and the US are closely linked by trade agreements, not all products flow freely. Legislation in the US or Canada can place purchase requirements on certain sectors or classes of trade. In our business, we often serve municipal, state, or federal clients. These government projects may run into Buy America or Buy American Act requirements. Products from a Canadian company sometimes meet requirements for these purchases, but sometimes do not. Additionally, there are tariffs on metals sourced in China.
It can be confusing for the occasional buyer to make sense of the range of legislation that might affect them. Often, the requirements seem more onerous than they are: waivers are available for many of our unique products. Even with surtax premiums, we can bring quotes for some projects under budget. For projects where neither waivers nor price still are too costly, we provide Buy America/n lines manufactured entirely in the United States. Customers managing such requirements can purchase without concern.
To look at the Acts that most commonly affect our customers, we’ve put together a small introduction to the Buy America and Buy American Acts, who they apply to, and how the tariffs on Chinese steel come into play.
The Buy American Act
In 1933, as one of the last actions of his presidency, President Hoover signed the Buy American Act into law. Its goal was to ensure the American government’s purchases supported American businesses.
In general, the Act mandates that US Government agencies should purchase “end-products” from American manufacturers. Further, it mandates that domestic materials make up 50% of the product’s manufacture.
However, like any well-established piece of law with international relevance, Buy American is complex in implementation.
The Act is not absolute. Government buyers can get a waiver to purchase outside the US in some circumstances. Federal agencies apply to use foreign products if domestic products are shown to be inconsistent with public interest; increase the cost of a project by 25%; or are unavailable in the right type, quality, or quantity.
In the construction sector, these rules apply to projects under a certain cost threshold, and the waivers for exemptions are slightly different. Foreign materials and products are priced with a surcharge, but waivers may still be requested for them.
The Buy America Act
Buy America is part of the Surface Transportation Act of 1982 and applies mostly to transportation. Any purchases of over $100,000, made with grants from either the Federal Transit Authority or the Federal Highway Administration, are to give American companies price precedence. This price precedence takes the form of a percentage added to Canadian bids. Details of a particular project determine what this differential might be. There are specific provisions for the manufacturer, like a requirement for US content in iron/steel.
The Airport and Airways Facilities Improvement Act
Between these two Acts came the Airport and Airways Facilities Improvement Act of 1970. This Act as created to help facilitate the building and maintenance of aviation infrastructure. Air transport was becoming an essential part of economy and trade, and the infrastructure funds previously allocated were not enough to keep up. To stay competitive, a fund was set up supplied out of new, earmarked taxes on travelers and planes.
Provisions in this Act specify that steel and manufactured products must have 60% US content and be assembled in the US.
On top of the domestic complexity of purchasing, the United States is part of several trade deals that offer exemptions. The Recovery Act allows certain American Federal Departments to buy from Canada as a domestic supplier. The World Trade Organization’s “Agreement on Government Procurement” additionally underwrites some state purchases, even when the money is federally transferred. The USMCA agreement between the United States, Canada, and Mexico also mediates governmental procurement between these countries, allowing more cross-border government purchasing than would otherwise be possible. (Some of the allowable maximums have changed from NAFTA limitations.)
America First tariffs on metals
The “Trump Tariffs” may be an additional cost when procuring goods internationally. Steel and iron, especially, are major Chinese exports, and many manufacturers rely on this source to keep prices down. When contract manufacturing with appropriate, knowledgeable oversight, quality does not need to be sacrificed.
One odd side effect of this tariff is that it’s sometimes hard for clients to judge the material based on cost. Often, people see a price tag as an indication of the longevity or strength of a material. Tariffs have somewhat obscured this indicator.
Procurement officers may want to keep a close eye on the type of material being offered. Ductile iron offers a different set of strengths than gray iron. Stainless steels come in ferritic, austenitic, and martensitic grades, all with different properties. Steel comes in mild and high carbon alloys. All these alloys have their proper place, but the lack of price signaling can be confusing.
We offer guides to various types of metals to help with the comparison:
- A Complete Guide to Stainless Steel
- Carbon vs Mild Steel
- Ductile Iron
- Cast Iron: A comparison of 5 common types
- Aluminum and Aluminum Casting
Purchasing foreign products
For non-governmental projects, the most common issue with purchase through our company is the America First tariff. Some of our products are sourced from China (and some from other jurisdictions around the world.) These acts of legislation and the tariffs have led us to diversify our supply chain to meet our customer needs. We often find that our lines suit our buyers’ budgets and requirements, with or without waiver. Please contact us for a conversation or quote and to see how best we can suit your project.