AT HIS inauguration, President Trump struck a grand note of economic nationalism: “We will follow two simple rules: Buy American and hire American.” Four days later, on Jan. 24, he ordered a restart to the Keystone XL oil pipeline; in the following weeks, he repeatedly implied that he had done so on the condition that the 1,200-mile tube linking Alberta, Canada, with refineries on the Gulf of Mexico would be constructed of American steel.
Well, promises were made to be modified. On March 2, the White House announced that the president’s strict “Buy American” rule does not apply to Keystone XL after all. This was only reasonable, given that the Canadian pipeline company had already stockpiled the necessary metal, about half of which was made outside the United States and half in Arkansas, by a foreign-owned firm, according to Reuters. The White House argued this was consistent with the fine print of the president’s Jan. 24 order directing the secretary of commerce to come up with a plan to require U.S.-made steel on all new pipelines: Keystone XL had been planned for almost a decade before then-President Barack Obama blocked it for environmental reasons, so it is not new.
Works for us! We never bought Mr. Trump’s Buy American shtick in the first place, any more than we did Mr. Obama’s similar provisos to various sections of his 2009 economic stimulus bill. Politically popular and (for certain sensitive national-security procurements) occasionally necessary though they may be, Buy American provisions generally make little economic sense.
To the extent they actually do succeed in identifying pure made-in-the-USA goods and requiring contractors to use them, whether they’re the best and cheapest available or not, they raise the cost of infrastructure and lower its quality. And given the prevalence of global supply chains for manufactured goods, it’s often not possible to identify such goods — at least not without expensive, time-consuming bureaucratic hassle of the sort Mr. Trump otherwise claims he’s trying to eliminate. It took Mr. Obama’s Energy Department well more than a year to complete the Buy American regulations for the stimulus bill’s energy-efficiency grant program.
What’s more, strict domestic-content rules can collide with the United States’ obligations under various international agreements requiring countries to provide fair access to one another’s procurement programs. It was never clear where Mr. Trump thought he derived power to dictate to Keystone XL, a private-sector project, in the first place. This certainly could have violated the spirit of the North American Free Trade Agreement, if not the letter. No matter how much Mr. Trump despises it, NAFTA is still the law of the land. Maybe that’s why his pipeline directive carefully insisted on Buy American, but only “to the maximum extent possible and to the extent permitted by law.” You could pump half the shale oil in North Dakota through that loophole.
To the extent it was not hollow, Mr. Trump’s pledge to Buy American would have been counterproductive. Thank goodness he didn’t keep it.