The "Buy America" executive order issued by President Donald Trump in April has hit the U.S. transit system with increased costs of 34 percent, according to an American Action Forum (AAF) study.
Those requirements put on the Federal Transit Administration (FTA) result in an average increase of $700K per car, according to AAF.
"Buy America" seeks to preserve American jobs, but any policy that restricts choice may raise costs, AAF writes.
"The benefits of Buy America/American policies are likely overstated, and they are, at least partially, responsible for higher infrastructure costs," AAF wrote. "They are also responsible for a slew of regulations imposed on infrastructure development. The cost of U.S. transit infrastructure (often subject to Buy America requirements) is higher than comparable foreign counterparts.
"The Buy America debate hinges on whether the benefits of sourcing products domestically (particularly maintaining strategic industries like steel) outweigh the economic cost burdens associated with protecting them," AAF writes.
"Buy America policies almost certainly contribute to higher infrastructure costs in the U.S., but it is hard to gauge just how much economic harm these policies cause.
"Considering that the federal government spends billions of dollars on transit infrastructure subsidies every year, it seems worthwhile to consider if federal policies associated with those investments are resulting in less efficient use of capital. The U.S. should, if anything, curtail Buy America policies to yield greater benefits from government expenditures," AAF concludes.
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