Sign in Subscribe
Prime ministers

Buy American Provisions Slowing US Economy, Jobs

Strategic Insights

— 1 min read

Trade experts warn that the Buy American provisions, meant to boost employment, are having an unintended consequence: slowing the distribution of stimulus money and hindering the US economy's growth. This delay is causing billions of dollars to be held back from entering the economy quickly, more than offsetting any potential job gains.

Key Takeaways:

  • The Buy American provisions are delaying the distribution of stimulus money, causing billions of dollars to be held back from entering the economy quickly.
  • The delays in stimulus spending translate into slower expansion in the US economy, which in turn slows Canada's recovery from the recession.
  • The policy is inflicting damage on individual Canadian companies that may lose contracts in the United States.
  • The US Chamber of Commerce estimates that up to 176,800 jobs could be lost in the US due to the policy.
  • Other countries may retaliate with local procurement rules, erasing any gains for US firms.
  • The Buy American measures may create an incentive for other countries to adopt protectionist policies, damaging the global economy.
  • Protectionism and market balkanization are threats to the global economy, slowing the recovery.
  • Canadian officials are proposing a waiver for Canada from the Buy American provisions in return for a guarantee to US companies.

Statistics:

  • The US Transportation Department has spent $48.1 billion on stimulus projects, with only 5.4% of funds allocated so far.
  • The Department of Energy has spent $45.2 billion, with only 1.4% of funds allocated.
  • The Commerce Department has spent $7.9 billion, with 6.7% of funds allocated.
  • The Environmental Protection Agency (EPA) has spent $7.2 billion, with only 1.4% of funds allocated.
  • The US economy is experiencing slower growth due to the delays in stimulus spending, impacting Canada's recovery.
  • Up to 176,800 jobs could be lost in the US if other countries retaliate with local procurement rules.

Sources:

  • WSJ
  • PROPUBLICA ANALYSIS OF U. S. GOVERNMENT DATA; CENSUS BUREAU VIA MOODY'S ECONOMY.COM

Read more