Encouraging Buy American Policies for the United States Postal Service

Background

Regulatory Impact

Before being revoked, the executive order issued on January 14, 2021, aimed to strengthen Buy American policies within the United States Postal Service (USPS). The order encouraged the USPS to adopt procurement practices that would align more closely with existing federal Buy American mandates. Specifically, it called for revisions in the USPS Supplying Principles and Practices (SPP) to reflect stronger preferences for American-made goods in line with the Federal Acquisition Regulation (FAR). This directive would not have led immediately to new regulatory rules, since the USPS operates independently of the executive branch's regulatory framework, but it would have pushed for voluntary compliance with heightened domestic content standards. This voluntary alignment signaled a shift towards more stringent internal guidelines relevant to procurement practices within the USPS.

Operational Adjustments

In operation, postal procurement officials would have had to re-evaluate their sourcing and procurement processes. According to the order, increasing the preference for American products meant that the USPS was advised to modify its evaluation criteria to impose an additional cost differential—like the one recommended in the executive order of 6%—on foreign-made goods when assessing competitive bids. This adjustment had the potential to affect the choice of suppliers and contractors, with an inclination towards selecting domestic options even at a higher cost. The intended outcome was to support American manufacturers, particularly those in industries supplying iron, steel, and manufactured goods, directly affecting the supply chain choices of USPS operations.

Social Policy Implications

Socially, the directive aimed to foster increased domestic employment by encouraging procurement of goods made in the United States. The insistence on a higher domestic content percentage mirrored efforts seen in other policy areas trying to boost American industry and workforce participation. Although USPS's autonomy meant these changes were more advisory than obligatory, the policy nonetheless echoed broader nationalistic themes espoused under the Trump administration, aiming to substitute imports with American-made products. This shift was in line with existing trends to reinforce economic nationalism and reduce dependency on foreign imports through executive actions.

Reason for Revocation

Ideological Shift

The revocation of this order by President Biden on January 25, 2021, was indicative of a broader ideological shift from the preceding administration's policies. The Biden administration signaled a move towards multilateralism and international cooperation, contrasting with Trump's America-first theme. Biden's decision was part of a broader strategy to reassess policies deemed protectionist, favoring those that engage cooperatively in global trade without sacrificing economic growth or American jobs. This pivot was critical because it was linked to his administration's agenda to reassert global leadership and repair alliances strained under previous policies.

Trade and Economic Considerations

The revocation was also rooted in economic considerations, specifically balancing domestic policy with international trade relations. The Biden administration prioritized addressing supply chain vulnerabilities exposed by the COVID-19 pandemic, not solely by restricting foreign inputs but by strategically enhancing resilience and capacity through global partnerships. Thus, removing stringent Buy American constraints on the USPS may have been seen as a step towards maintaining flexibility within federal operations and preventing potential disruptions or increased costs in the mailing service network.

Administrative Effectiveness

From an administrative perspective, the swift reversal of the order aimed to streamline government operations across departments and agencies, ensuring a harmonized procurement strategy. The USPS, while independent, forms a crucial link in the federal service continuum, requiring standardization where possible to minimize complexity, delays, and costs associated with fragmented and inconsistent procurement policies. Biden's revocation facilitated a cohesive strategy synchronizing with broader, more collaborative procurement reforms being considered by his administration.

Bipartisan and Public Reception

Political and public reactions also played a role in Biden's decision. There existed bipartisan consensus on the importance of American manufacturing, but differences arose regarding the means to achieve it. While Trump's approach emphasized direct mandates, Biden's camp supported fostering innovation and competitiveness without excessive isolation from international markets. Public sentiment, especially amid rising consumer prices and supply chain challenges during the pandemic, encouraged policies perceived as balanced and pragmatic versus stringent and nationalistic directives.

Winners

Foreign Manufacturers

The revocation potentially favored foreign manufacturers and suppliers who benefit from a more competitive procurement landscape in federal entities like the USPS. Without the added cost differentials from the excised order, foreign companies could more actively participate in bidding processes, potentially offering lower prices or more technologically advanced solutions than their domestic counterparts. This change provided them with broader access, particularly those entities dissuaded by the previously suggested preferential policies towards American-made products.

International Trade Partners

Countries with established trade relationships with the United States might have perceived the revocation as a positive gesture supporting free trade. Nations adversely affected by stringent Buy American policies saw the shift as a potential revival in trade volumes, allowing for renewed collaboration and industrial exchange. This also opened diplomatic avenues to strengthen bilateral relations, assuring partners that the U.S. remained committed to balanced and non-protectionist global trade practices.

Consumers and Service Reliability

USPS customers potentially benefitted, albeit indirectly, as cost efficiencies might be realized with the reduction in preferential procurement pricing adjustments. By allowing more competitive bids, USPS could allocate resources more effectively, translating potentially into stabilized pricing tactics and service improvements. Consumers benefited when operational costs stabilized rather than increased due to enforced procurement restrictions, maintaining fair postage rates and service reliability.

Losers

Domestic Manufacturing Industries

U.S. manufacturers, particularly those supplying iron, steel, and comparable products, were likely disadvantaged by the revocation. The executive order provided a mechanism to counteract competitive pricing from abroad by altering contract award valuations, effectively giving domestic goods a natural edge. Losing this edge might have placed additional pressure on these sectors to meet potentially lower-cost international competitors without policy-driven support.

Employees in the Manufacturing Sector

The revocation may have negatively impacted workers within American manufacturing indirectly reliant on USPS procurement. The added demand for domestic materials driven by the previous order could have fueled job growth or at least job security in sectors aligning with USPS supply needs. Without this bolstered demand, potential opportunities for employment or expansion within manufacturing firms aligned with postal service contracts diminished.

Supporters of Protectionist Economies

Advocates of protectionist policies, who viewed the original order as a means to invigorate domestic industries amidst increased globalization, perceived the revocation as a setback. Those groups, including certain labor unions and advocacy coalitions, feared that the absence of tailored procurement preferences weakened efforts to rebuild and centralize economic activities within U.S. borders, diminishing efforts to strengthen localized supply chains and self-sufficiency.