Buy America vs Buy American – What Canadians need to know
While often confused or interchanged, there is a big difference between the Buy American Act and Buy America Act. In this blog, we provide an overview of the two and what each means to Canadian businesses.
Do you get confused by the terms of “Buy American” vs “Buy America”? Rest assured that you are not alone. While they sound very similar, from a legislative perspective, they affect Canadian businesses differently. Here is a quick snapshot of the difference between the two acts that we cover in more details below.
| Buy America Act | Buy American Act |
Applies to federal government-funded procurements by EPA, FTA, FHWA, FRA, Amtrak and FAA | Applies to U.S. federal government contracts made by federal agencies |
For purchases of iron, steel and other products used in infrastructure | For purchases over $10,000 USD for construction projects, infrastructure investments, and procurement of goods and services |
50% to 100% “made in the U.S” requirements | 60% “made in the U.S” requirements |
Waivers available | Waivers available |
What is Buy America?
The Buy America Act is a subsection of the Surface Transportation Assistance Act of 1982 and refers specifically to buying iron, steel and other products. It applies to federal government-funded procurements by specific departments and agencies for infrastructure-related projects that receive federal funding. Affected projects include those involving highways, public transportation, airports, aviation and intercity passenger rail and some water infrastructure projects.
Impacted federal agencies
U.S. departments and agencies that are required to abide to the Buy America Act include the U.S. Environmental Protection Agency (EPA), the U.S. Federal Transit Administration (FTA), the U.S. Federal Highway Administration (FHWA), the U.S. Federal Railroad Administration (FRA), Amtrak and the U.S. Federal Aviation Administration (FAA).
The Buy America requirements vary by department and agency and this table from the Canadian Trade Commissioner Service demonstrates what Canadian businesses need to know when evaluating potential procurement opportunities with each.
Contract value threshold at or above which the requirements apply | Impacted goods | Requirements | |
Federal Transit Administration (FTA) – Buses, subways and other mass transit projects | US$150,000 | Iron, steel and other components of rolling stock (such as buses, vans, cars, railcars, locomotives, and ferry boats) Non-rolling stock | 70% made in the U.S. Final assembly must also take place in the U.S. 100% made in the U.S. |
Federal Highway Administration (FHWA) – Highways | US$2,500 or 0.1% of the contract value, whichever is higher | Iron, steel and manufactured goods made predominantly of steel and iron. Does not apply to raw materials such as iron ore, pig iron, scrap steel and limestone. | 100% made in the U.S. |
Federal Railroad Administration (FRA) – Trains | US$100,000 | Iron, steel and manufactured goods | 100% made in the U.S. |
Amtrak – National Railroad Passenger Corporation | US$1 million | All manufactured and unmanufactured goods | 50% made in the U.S. |
Federal Aviation Administration (FAA) – Airport construction | No threshold | Steel and manufactured goods | 60% made in the U.S. |
No threshold | Manufactured goods made with iron and steel funded by the following EPA programs: Clean Water State Revolving Fund; Drinking Water State Revolving Fund; Water Resources Reform and Development Act; and Water Infrastructure Finance and Innovation Act | 100% of the total cost of iron and steel products must come from U.S. components |
Buy America exemptions for Canadians
Buy America requirements are typically attached to appropriations related to federally funded infrastructure projects for specific departments and agencies. For this reason, there are no Buy America requirements for Canadian contracts with U.S. DoD.
Buy America waivers
For non-U.S. DoD opportunities, if a U.S. procurement is covered by the obligations of the relevant section of the revised WTO Agreement on Government Procurement (GPA), Canadian suppliers may bid on the opportunity. When procurements are not covered by other trade agreements, the applicable Buy America requirements may be waived to allow the use of non-U.S. goods. Generally, waivers may be granted when:
- the use of a U.S. product is impractical or inconsistent with the public interest; or
- the product is not mined, produced, or manufactured in the U.S. in sufficient and reasonably available commercial quantities of a satisfactory quality; or
- the use of a domestic product would lead to an unreasonable increase of the total cost of the project.
Waiver requests and reviews are posted on the U.S. Federal Register. Each U.S. federal department and agency may have its own specific rules for the issuance of waivers and Canadian suppliers should consult with the department or agency to get a full understanding of when waivers may be granted and what documentation is required to apply for a waiver.
What is Buy American?
The Buy American Act, as implemented in Federal Acquisition Regulation (FAR) Part 25, requires the U.S. government to preferentially purchase goods and services that are made in the United States. The policy applies to a wide range of purchases over $10,000 USD made by federal agencies for construction projects, infrastructure investments, and procurement of goods and services.
Starting October 25, 2022, for a product to be considered as being produced in the U.S., it must be manufactured in the U.S. and at least 60 percent of the cost of their components must come from the U.S. These thresholds are due to increase in 2024 and 2029.
Learn more about recent amendments to Buy American Act and how it affects Canadians
Impacted federal agencies
The Buy American Act requires all U.S. Federal agencies to procure domestic (U.S.-based) materials and products. Two conditions must be present for the Buy American Act to apply:
- the procurement must be intended for public use within the United States; and
- the items to be procured or the materials from which they are manufactured must be present in the United States in sufficient and reasonably available commercial quantities of a satisfactory quality.
Buy American exemptions for Canadians
The U.S. government waives Buy American requirements for long-standing U.S. DoD bilateral reciprocal defence procurement agreements, such as the U.S. International Traffic and Arms Regulations that regulate the export of military equipment and the Canada-U.S. Defence Production Sharing Agreement (DPSA), which gives Canadian companies access to U.S. DoD procurement opportunities.
DFARS 225.872-1 which supports U.S. DoD’s ability to purchase products, services and solutions from Canada specifically states that:
As a result of memoranda of understanding and other international agreements, DoD has determined it inconsistent with the public interest to apply restrictions of the Buy American statute to the acquisition from qualifying countries, Canada being one of those countries.
Essentially, U.S. DoD contracts with Canada businesses are exempt from Buy American regulations and Canadian suppliers benefit from the same treatment as American suppliers.
Buy American waivers
When procurements are not covered by other trade agreements, the applicable Buy American restrictions may be waived if:
- the use of a U.S. product is impractical or inconsistent with the public interest; or
- the product is not mined, produced, or manufactured in the U.S. in sufficient and reasonably available commercial quantities of a satisfactory quality; or
- the use of a domestic product would lead to an unreasonable increase of the total cost of the project.
Canadian businesses looking for a Buy American Waiver may have to work with their sponsors and be prepared to help provide information for supporting documents.
Beyond Waivers – Other exemption opportunities
In addition to exemptions for contracts with the U.S. DoD, Buy American and Buy America requirements do not apply to Canada for U.S. federal purchases covered by the revised World Trade Organization Agreement on Government Procurement (WTO GPA), to which Canada, the U.S. and 46 other countries are Parties. When bidding on U.S. federal procurements covered by these agreements, Canadian suppliers benefit from the same treatment as American suppliers.
Download our guide to learn what opportunities are available to Canadian businesses, where to find these opportunities and how to get started selling to the U.S. Department of Defense.
Canadian Government support
Government of Canada partners such as the Trade Commissioner Service are available to help Canadian businesses who are looking to sell directly to U.S. federal agencies and ensure compliance to Buy America and Buy American provisions.
CCC is the Canadian agency to work with for those looking to sell to the U.S. DoD. As Canada’s foreign military sales agency, we help Canadian exporters navigate U.S. DoD procurement and take advantage of our reciprocal defence agreements.
Learn more about selling to the U.S. Government
Regardless of whether the Buy America or Buy American provisions are applicable to your sales opportunity, CCC’s export advisors are here to help Canadian businesses navigate the highly regulated U.S. government procurement system.
Remember that contracts with U.S. DoD are not impacted by Buy America or Buy American regulations – Learn more about Selling to the U.S. Military
Want to learn more about CCC’s service to help Canadians sell to the U.S. military? Read about our U.S. DoD Prime Contractor service.
This post was last updated on April 26, 2023.
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