Will Congress Roll Back a Portion of Our Buy America Rules?

Weakening this commonsense policy in federally backed housing projects is not going to improve housing affordability.

There’s a big bill moving through the halls of Congress that aims to address housing affordability in the United States. That’s good! Housing is expensive and in short supply in this country, with a multitude of factors contributing to stubbornly high prices and availability. But tucked inside that bill are provisions that would cut back Buy America requirements for federally funded housing construction and rehabilitation projects.

That’s not going to fix the housing problem. If anything, by undercutting jobs for U.S. factory workers and destabilizing the communities in which they live, this ill-advised proposal may make our housing matters even worse. Job security and housing affordability are inextricably linked.

Here are the specifics: The “Housing for the 21^st Century Act,” as it stands, would eliminate domestic content preferences from the construction or rehabilitation of federal housing structures under the U.S. Department of Housing and Urban Development’s (HUD) HOME Investment Partnerships Program. HUD projects can be anything from single family homes to high-rise towers with hundreds of units. And this bill would eliminate Buy America coverage for inputs that range from structural steel and lumber to roofing and siding to iron and PVC pipe to drywall and flooring to appliances and countertops.

These materials and products are already made here in the United States by America’s workers, and witnesses at a recent hearing testified that the cost difference of using domestic products versus imported ones is minimal to nonexistent. So while there are dozens of issues driving housing costs up in this country – like restrictive zoning laws, slow wage growth, institutional investors stockpiling inventory, and high interest rates – this bill is going out of its way to roll back Buy America as if it were the chief problem here.

It is important to recognize the role of Buy America: It incentivizes companies to invest in the American workforce and adhere to established U.S. safety and environmental standards. In its absence, taxpayer dollars spent on housing and other infrastructure can encourage and reward offshoring, leading to a decline in U.S. industries and the communities that depend on them.

Domestic supply chains for iron and steel, construction materials, and many other products are growing stronger each day, thanks to the Build America Buy America (BABA) Act that passed with 2021’s infrastructure bill. Advanced with bipartisan support and modeled after President Trump’s first term executive actions, BABA extended existing Buy America rules to all federally assisted infrastructure projects, including public buildings that HUD programs support. Buy America is a commonsense policy, with waivers specifically built in to overcome issues like nonavailability or excessive cost of using the domestic item.

But HUD has approved just eight project-specific waivers (six were for the same project!). And just six more are “under evaluation” (with three on the same item). Instead, HUD has relied on general applicability waivers to delay Buy America implementation for years since BABA’s 2021 enactment, and it has exempted projects under $250,000, projects with fewer than five units, exigent and emergency activities, and Tribes and Pacific Islands. HUD even allows “de minimis” foreign inputs of up to $1 million per project to be used.

All this flexibility that has already been approved raises some interesting questions about the true motivations of the developers and other groups asking Congress to get rid of Buy America.

At a housing oversight hearing on Wednesday, HUD Secretary Scott Turner suggested that additional administrative action could be on the way. Let’s hope that HUD is planning to rely on ad hoc, project-specific waivers where there is a justification, rather than going back to issuing broad, general waivers. Targeted waivers create powerful incentives for companies to make investments in the U.S. market where supply chain gaps have been identified – such as elevators and HVAC equipment. General waivers, on the other hand, are a taxpayer handout to Chinese imports.

HUD should take steps to accelerate its process for reviewing and approving these project-specific waivers.

And, for its part, Congress should reject any efforts to weaken the BABA law. We’ll be keeping an eye on this bill as it moves forward in Congress.