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Trump’s ‘Buy America’ Plan Will Backfire

Guest Editorial by Drew Johnson
May 13, 2020

In response to the ongoing coronavirus pandemic, the Trump administration wants to quarantine American manufacturing. At any time now, the president could sign an executive order aimed at returning the pharmaceutical supply chain to the United States.

The order would force government agencies to purchase pharmaceutical products and other crucial medical supplies exclusively from domestic sources. The White House hopes this “Buy America” plan will give the economy a boost and decrease the United States’ reliance on countries like China and India.

The president may have good intentions, but this plan fails on all fronts. Imposing Buy America requirements would disrupt our safe, effective supply chain in the best of circumstances. Doing so during the coronavirus outbreak could make it harder for the United States to fight COVID-19.

A Buy America order would force the Departments of Defense, Veterans Affairs, and Health and Human Services to buy pharmaceutical ingredients, medical supplies, and raw materials from American suppliers.

This would plunge U.S. drug development into chaos. Pharmaceutical companies rely on a global supply chain to develop everything from statins to advanced cancer treatments. U.S. companies import 80 percent of “active pharmaceutical ingredients” from abroad, mostly from China and India.

Contrary to what advocates claim, sourcing APIs and other ingredients solely from American companies would not make pharmaceuticals safer. The U.S. Food and Drug Administration routinely inspects overseas facilities and ensures the safety and quality of American-made drugs.

While the president’s executive order wouldn’t make drugs safer, it could make them more expensive. Manufacturing in developed countries can cost five times more than doing so in countries like China and India. By shifting production to the United States, Buy America rules tend to increase costs for the government, who pass these increased costs onto taxpayers.

More importantly, carrying out the Buy America order would require companies to quickly construct new factories and secure stockpiles of raw materials the United States currently lacks. All told, repatriating the pharmaceutical supply chain would cost $2 billion and take up to 10 years.

Rushing this process would imperil America’s pandemic response. Companies currently working to develop COVID-19 treatments and cures would have to cease operations to comply with the new rules. Companies would also have to roll back production on other drugs, leading to potential nationwide medicine shortages.

The Buy America order would also require the United States to withdraw from World Trade Organization commitments and other free trade agreements. This would prompt our trading partners to retaliate, which could negatively impact trade and the American economy for years to come.

President Trump believes a Buy America order would make America safer, healthier, and economically sound. In reality, it would have the exact opposite effect. Let’s hope the White House abandons this plan before it’s too late.

Drew Johnson is a columnist and government watchdog who serves as a senior fellow at the National Center for Public Policy Research.