Once again, Trump is using an Executive Order as a political stunt by signing an executive order today requiring federal agencies to purchase products using more American components.
President Trump signed an executive order that requires federal agencies to purchase more American products. He said the order will boost the percentage of US components for qualifying American-made products from 50 percent to 75 percent and the threshold for iron and steel products will increase to 95 percent.
Analysts say that the executive order will require federal governments to pay more for many products with taxpayers ending up paying for this policy.
The Director of trade studies said, "When we artificially reduce the pool of qualified suppliers or the variety of eligible supplies that can satisfy procurement requirements, projects cost more, take longer to complete, and suffer from lower quality."
Competition increases the pool of higher quality of products as a lower price. Trump's Made In America" policy did not live up to expectations because the trade deficit has increased to its highest level since taking office. This years national deficit will reach over $1 Trillion this year and is expected to remain at that level for years to come.
The only companies that come out ahead are the steel and iron companies who will increase prices without increasing labor.
A few decades ago, it was foreign competition from Brazil and Australia that led the US iron and steel manufactures to increase efficiency and production at a lower cost, and without foreign competition, the industry will have no incentives to make the right investments that will result in higher productivity and lower costs. When Trump took office and added tariffs on foreign countries importing steel and aluminum, this immediately increased the costs of production for all the industries relying on these inputs (e.g., cars, beer cans, boats, etc.).
This executive order will definitely be challenged in the World Trade Court by other countries. By increasing the percentage of American made products for federal procurement will put foreign governments at a disadvantage by making their products less competitive in global markets. It will also hurt American exporter companies that rely on exporting American products by decreases America's global trade market to foreign countries by 25%, It is also another form of the government paying subsidies to American Companies and closing the trade market to competing companies.