How Applying ‘Buy America’ Provisions to IT Undermines Infrastructure Goals

Because the cost of producing information technology (IT) products is lower overseas, applying Buy America provisions to IT components of projects underwritten by the infrastructure bill will raise costs, reduce infrastructure build, and delay project completion—all without creating any net new jobs. Congress included in the recent infrastructure bill stronger applications of Buy America provisions, which govern the extent to which federal government purchases must be of products substantially made in the United States. The US share of global computer and electronics output had already fallen 8.2 percentage points between 1999 and 2009 when the Obama administration provide a blanket waiver for IT products in the American Recovery and Reinvestment Act of 2009. Since then, US domestic IT capabilities have weakened even more, dropping another 2.3 percentage points of global market share. Because of this, applying Buy America provisions to IT components of federal infrastructure investment would raise IT costs by approximately 25 percent, on average. Boosting US manufacturing output is critical but applying Buy America provisions to information technology will do little to reshore IT production. It will, however, reduce the amount of US infrastructure that is built.