SETTING THE BENCHMARK

Buy America Initiatives Likely to Remain While Federal Spending Priorities Shift

by Jen McAlpine / January 29, 2025

With President Donald Trump assuming office, many companies wonder if his administration will change the “Buy America” requirements that expanded in scope under the Biden administration's significant investments in domestic infrastructure, high-tech manufacturing, and clean energy. Buy America requirements aim to bolster the U.S. economy by requiring products used in federally funded programs to be manufactured in the United States and to include a minimum quantity of U.S.-made components. Benchmark has ten manufacturing facilities in the United States, serving many customers in communications, transportation, and other infrastructure markets affected by Buy America requirements. To help electronics OEMs navigate complex Buy America, Buy American, and other domestic preference requirements, Benchmark published the Unofficial Guide to U.S. Domestic Preference Laws for Electronics e-Book.

In this blog post, Benchmark offers insights into how the second Trump administration may reprioritize federal spending in ways that could impact current Buy America rules. Our best estimation is that, while the new administration could reallocate funds to different programs that better align with its policies, Buy America requirements are likely here to stay no matter which federal programs become priorities. As discussed below, that could mean significant changes for spending under three laws with Buy America components: the Inflation Reduction Act (IRA), the Infrastructure Investment and Jobs Act (IIJA), and the CHIPS and Science Act (CHIPS Act).

New Administration Will Likely Support Buy America Broadly, But its Funding Priorities Remain to Be Seen

President Trump championed Buy America laws during his first term in office, and those laws were expanded even further under President Biden. Once back in office, President Trump will likely continue this bipartisan commitment to Buy America preferences. On the campaign trail, then-candidate Trump emphasized a push to increase domestic manufacturing, consistent with calls from other Republicans to strengthen the Made in America Office (within the Office of Management and Budget (OMB)) and close loopholes in applying Buy America policies.

That is only one part of the equation, however. While the emphasis on Buy America-compliant products will likely continue (and may even increase), the Trump Administration has suggested reducing funding to some federal investment programs in favor of other priorities, such as tax cuts and border security. Here’s a look at the investment programs potentially at risk under the IRA, the IIJA, and the CHIPS Act:

Inflation Reduction Act of 2022

The IRA, passed in August 2022, was the largest federal investment in social, environmental, and infrastructure programs since the New Deal. The IRA included more than $1 trillion of direct grants and tax credits incentivizing the development of clean energy infrastructure and domestic supply chains, drawing the interest of many Benchmark customers. The IRA’s grant funding and tax incentives further Buy America policies through domestic production requirements. For example, the IRA variously amended and added to the tax code sections 45 and 45Y (renewable energy production tax credits) and 48 and 48E (renewable energy investment tax credits). Each credit provides for a domestic content bonus, meaning a taxpayer’s credit may be increased by 10 percent of the otherwise available credit amount if domestic content requirements are met. Additionally, the IRA provides the section 45X advanced manufacturing production tax credit for producing and selling certain domestically produced eligible components (e.g., solar and wind energy components).

While campaigning, President Trump pledged to  "rescind all unspent funds" under the IRA. In early January 2025, the House Budget Committee Chair, Rep. Jodey Arrington (R-TX), circulated a list to Republican colleagues of potential programs to cut. The IRA made the list several times, including green energy grants funded under the Act. A notation next to “Green energy tax credits” said, “depending on political viability.” That political viability is very much in question. Numerous Republican members of Congress have spoken in favor of IRA tax credits for manufacturers. Last term, 18 of them wrote a letter to House Speaker Mike Johnson (R-LA) warning him against repealing certain IRA tax credits helping to fund manufacturing projects in their districts.

Ultimately, a complete repeal of the IRA seems unlikely. Many political prognosticators conclude that too many jobs have already been created in the clean energy sector, many in states and districts represented by Republican Senators and Representatives, to make a total reversal politically viable. Also, any partial repeal might be difficult to execute without also compromising provisions that benefit consumers and homeowners rather than industry. That, in turn, may bode well for companies pursuing a Buy America-compliant market strategy targeting beneficiaries of IRA-funded grant programs.

Infrastructure Investment and Jobs Act

The IIJA, also known as the Bipartisan Infrastructure Act, became law in November 2021. With more than $1.2 trillion in authorized spending, it includes funding for traditional infrastructure projects, like road and bridge construction and airport and port modernization, as well as plans to improve access to clean drinking water and broadband internet. The Build America Buy America Act (BABA), enacted as part of the IIJA, establishes a domestic content preference for all projects receiving federal funding. BABA requires that those projects use only iron, steel, manufactured products, and construction materials “produced in the United States.” Under BABA, a manufactured product is produced in the United States if (1) the end product is manufactured in the United States, and (2) the cost of the product’s components is at least 55 percent of the product’s total component cost.

The incoming administration has criticized the IIJA, and Rep. Arrington's list of potential cuts does include IIJA provisions. However, many projects funded by the IIJA are also likely to have strong bipartisan support, either at the national, regional, or local levels and clawbacks of committed funds could be difficult to execute. While executive agencies could, for example, redirect uncommitted funds away from environmental programs and toward more traditional construction, it seems likely that most IIJA funding will eventually be spent on activities subject to Buy America requirements.

CHIPS and Science Act

Signed into law by President Biden in August 2022, the CHIPS Act’s goal was to increase U.S. competitiveness with China in microchip production. The Act allocated $280 billion to support semiconductor research and manufacturing in the United States, including $52 billion in “CHIPS for America” subsidies and tax credits for domestic chip manufacturing. During his campaign, then-candidate Trump called the program a "bad" deal for the United States. He said the U.S. should improve its competitiveness by imposing tariffs on foreign-import chips rather than subsidizing domestic production. Those comments led the Biden administration to implement a last-minute push to finalize funding for domestic chipmakers. Given its potential to boost American manufacturing in states and districts represented by both political parties, it could be challenging to walk the grants back now.

Conclusion

Buy America policies have broad bipartisan support and the backing of the incoming Trump Administration. While domestic preference requirements are likely to continue in the new administration, funding for incentives to develop the domestic supply chain in certain sectors, particularly clean energy, could be in jeopardy. In contrast, investment in more "traditional" sectors, such as construction and defense, could stand to benefit.

For electronics OEMs selling into communications, green energy, and infrastructure markets, the path forward isn't straightforward. Companies need to evaluate the risks associated with the legislation that applies to their products. For some cost-sensitive markets, such as green energy systems, a delay or repeal of certain grant programs may make manufacturing in a lower-cost geography more attractive after a Total Cost of Ownership analysis. For others such as more traditional infrastructure, staying the course with a Buy America-compliant sourcing strategy may be best. Benchmark's U.S. and global network, along with experience supporting customers' Buy America-compliant products, let us support our customers with a robust and flexible strategy.

Part two of this series will examine the mechanisms the Trump administration would need to leverage to reduce federal spending authorized over the past four years. For OEMs targeting green energy, communications, and other infrastructure markets supported by this federal spending, a deeper understanding of these legal mechanisms will help you evaluate your future Buy America compliance decisions.

Want to find out if your product can meet Buy America requirements while staying cost-competitive? Contact us!

Manufacturing Supply Chain Industrial Communications

about the author

Jen McAlpine

Jen McAlpine is the Director of Product Marketing and Strategy at Benchmark, developing offering strategy and messaging for Benchmark's product realization services. Prior to joining Benchmark, she was a Foreign Service Officer with the U.S. Department of State, serving in U.S. Embassies in Ireland, Gabon, Algeria, and Guinea. She holds an MBA from W. P. Carey School of Business at Arizona State University and a BA in Economics from the University of Minnesota.

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