[A “Buy American” policy] typically raises costs. The U.S. should be concerned about building more and building faster. To take one example: A disgraceful new report on New York’s Metropolitan Transit Authority found that it spent $4.5 billion on the first leg of the Second Avenue subway line. Reducing America’s complex system of construction bottlenecks to high material costs is wildly unfair; in fact, the MTA spent most of those billions on design, engineering, and construction of the tunnel. But building certainly won’t get any cheaper or easier if our policies increase the cost of essential materials by making foreign purchases of them illegal. All things equal, buying American might make building in America more expensive at a time when we should be obsessed with reducing costs rather than raising them.
B.A. can make key supply chains less resilient. Last spring, a bacteria outbreak at a Michigan plant that makes infant formula created a scary shortage. It also offered a lesson on the downsides of protectionism. The U.S. government makes the legal importation of otherwise-safe European formula almost impossible, going so far as to seize shipments at the border. The government also awards contracts to only a small number of approved formula makers, which means three companies account for practically all U.S. formula sales. These restrictions make us more vulnerable to emergencies, such as a bacteria-infested plant in Michigan. Compare this story with one about the COVID shots: When a Baltimore facility that made Johnson & Johnson vaccines reported a catastrophic failure, the company could rely on a global network of factories that picked up the slack. The U.S. should consider “friend-shoring” the production of certain materials—that is, working with our allies to create many nodes around the world so that if one fails, no catastrophe ensues.