President Joe Biden swept into office with a mandate to turn the page on “America First” jingoism — yet strains of economic nationalism still echo in the White House’s “Buy American” zeal.
American manufacturing is booming, with factories scrambling to hire more workers and output growing to its highest level on record. America’s global allies are helping to fuel this domestic resurgence, both as markets for our exports and as sources for inbound investment to fuel more hiring.
To ensure U.S. competitiveness and manufacturing resilience, the Biden administration should lean into global companies’ eagerness to invest in the U.S. economy and hire American workers. When it comes to accelerating our economic recovery, global investment — and global supply chains — are high-octane rocket fuel.
In fact, in the past five years, a whopping 69 percent of all new U.S. manufacturing jobs were created by international companies. That does not even include recent announcements like the 400 new union jobs being added at Mack Trucks, owned by Volvo Group North America, whose Lehigh Valley manufacturing facility the White House chose as the backdrop for its recent rollout of stricter Buy American mandates.
All told, more than $4.6 trillion in foreign investment has flowed into the U.S. economy as of last year — an increase of $187 billion over 2019, with roughly two-thirds of this gain coming from Europe. International companies employ 8 million U.S. workers, paying 20 percent higher wages than the economy-wide average and producing roughly a quarter of all U.S. exports.
Biden and his economic team clearly appreciate the benefits of an interconnected global economy. In June, Biden pledged the U.S. would “maintain a level playing field” as part of a commitment to ensure that we remain “the most attractive place in the world for businesses to invest and grow, thus creating jobs here at home, strengthening supply chains across the country, and deepening our relationships with allies and partners.”
Biden’s choice of a foreign-owned manufacturing plant for his recent Buy American speech further underscores his appreciation for the contributions global companies make to U.S. job growth. Yet this instinct for openness and cooperation sometimes runs up against the political appeal of Buy American messages, which in their most extreme forms actually undermine U.S. job growth and national security.
Last month, for example, the U.S. National Reconnaissance Office, or NRO — the intelligence agency responsible for America’s spy satellites — disclosed draconian procurement rules that prohibit the agency from buying technology from any international contractor, even those headquartered in closely allied countries and manufacturing their technology right here in the U.S.
Everyone understands the need to protect sensitive national security supply chains, but procurement policies that can’t distinguish between China and Russia on one hand and our closest geopolitical allies on the other aren’t going to make us any safer.
As the NRO example demonstrates, it is easy for policies intended to increase domestic production to morph into protectionist policies that actually undercut U.S. job growth. That is why the administration’s proposed new Buy American rules raise serious questions about how products built here in the U.S. by foreign-headquartered companies will be treated in federal purchasing decisions. It is critical that Biden ensure these rules are not misinterpreted to exclude the U.S. manufacturing operations of international companies who rely on global supply chains.
The economic reality is that global companies want to build things here in the U.S. The massive inflow of foreign direct investment into our economy bears this out: Global executives are bullish about betting on our strong business climate, huge consumer market and highly skilled workforce. And these investments in turn create more jobs, accelerate our recovery and strengthen our economic and geopolitical bonds with our global allies.
American prosperity grows from embracing our leadership role in an integrated global economy, not pretending we can go it alone. It is great to see Biden recognize that fact — and critically important that his administration never lose sight of it.
Nancy McLernon is the president and CEO of the Global Business Alliance, an association representing the U.S. subsidiaries of more than 200 international companies.