The latest round of tariffs introduced by the Trump administration on April 2, 2025, are expected to significantly impact the competitiveness of foreign goods in the U.S. market. In order to reduce the impact of these tariffs, some foreign manufacturers may be considering switching some of their production to the United States by partnering with local manufacturing providers.
Our firm has experience assisting businesses in establishing production lines in the U.S. by entering into manufacturing supply agreements with local manufacturers. These supply chain agreements require careful consideration of the parties’ respective obligations, particularly concerning expected volumes, warranties, and logistics management. These agreements should also include safeguards to protect the foreign manufacturer’s intellectual property rights and establish quality standards consistent with those normally employed in their country of origin. By leveraging our experience, foreign manufacturers can ensure a smooth transition of their production operations.
For manufacturers of products that are incorporated into construction projects, establishing production lines in the U.S. offers additional benefits beyond potential tariff savings. It may also make products eligible for selection in federally-funded construction projects. Two key frameworks to consider are the Buy American Act (BAA) and the Buy America regulations.
The Buy American Act (BAA) applies to direct federal procurement, such as contracts for federal building construction. Under the BAA, products must be manufactured in the U.S., with at least 55% of the cost of components sourced domestically. It is important to note that these thresholds may vary based on recent policy changes.
Buy America regulations are more restrictive and apply to federally funded transportation projects, such as highways and rail systems. Under the Federal Transit Administration (FTA) and Federal Highway Administration (FHWA) rules, all steel, iron, and manufactured products must be produced in the U.S. without reliance on a component cost threshold. This stringent requirement ensures that transportation projects funded by the federal government prioritize domestic production.
Foreign manufacturers would typically learn of these requirements if their goods are being specified by a U.S. architect or contractor that is handling the procurement for a project with federal funding. Typically, the manufacturer would be required to provide a certificate of compliance with the project’s country of origin requirements.
In conclusion, the tariffs introduced by the Trump administration present challenges for foreign manufacturers, but they also create opportunities for those willing to adapt their production strategies. By partnering with local manufacturing providers, foreign manufacturers can seek ways to stay competitive in the U.S. market. Compliance with regulations such as the Buy American Act and Buy America can provide access to federally-funded projects.
Our firm has assisted foreign businesses in navigating these complexities and establishing successful production lines in the U.S.
