Trump's 'Buy American, Hire American' Order May Hurt Some Companies

KENOSHA, WI — President Donald Trump signed a new executive order Tuesday during his visit to the Snap-on tools company's headquarters in Kenosha, Wisconsin. The "Buy American, Hire American" decree emphasizes preventing fraud and abuse in the foreign work visa program and requires American taxpayer-funded agencies to utilize more American products and services, but critics say it will make it more difficult for specialized industries to hire workers and for the construction industry to buy steel and other materials it needs to rebuild the nation's infrastructure.

The order targets the H-1B visa program, which currently allows 85,000 workers to enter the U.S. annually, mainly in the tech industry. It is too late for Trump's new order to affect the program this year, as the cutoff was April 3, but next year, the number of H-1B workers coming into the U.S. will likely drop from 85,000.

Overall, the new executive order calls on U.S. agencies to review current laws and close the loopholes they find as well as renegotiating or revoking free-trade waivers with foreign countries.

During a background briefing, a senior administration official said "groups that represent workers that have begged for reforms to Buy American and Hire American, and they’ve been ignored by, frankly, the political system for a very long time."

On the "Hire American" portion of the order, the senior administration official said "this executive order will call for the strict enforcement of all laws governing entry into the United States of labor from abroad for the stated purpose of creating higher wages and higher employment rates for workers in the United States." The official also said the order calls for the departments of Labor, Justice, Homeland Security and State to quickly crack down on fraud and abuse regarding foreign work visas.

Paul Holland, a partner at Foundation Capital, opposes the tightened restrictions. He said of limiting the work visas, "It's a pretty bad idea overall." Noting the immense success of many Silicon Valley companies, who often depend on foreign talent, he said, "Frankly, none of that would occur if we weren't able to tap talent from all around the world."

A White House senior administration official said "every agency and department of government will conduct top-to-bottom assessments aimed squarely at cracking down on weak monitoring, enforcement, and compliance efforts, and at rooting out every single Buy American loophole."

Buying American, according to the order, means American agencies will have less opportunity to buy goods from foreign governments and companies. It is a boost to the U.S. steel industry, as a section of the order requires that transportation projects use steel "melted and poured" in the United States.

This could have a negative impact on Trump's $1 trillion plan to rebuild America. Ken Simonson, chief economist for the Association of General Contractors, a lobbying group, also opposes the order.

“Trade restrictions such as ‘Buy American’ limit the ability of producers—whether it’s contractors or manufacturers—to get the best prices for the things they need, and ultimately the public is either going to pay more or receive less," he told Fortune.

Steve Case, a founder of AOL, supports the new executive order. According to Fox Business News, he said, “The goal of buying American, hiring American is of course the right thing." He also noted that foreign workers can have a massive impact on American business.

“We need to remember that part of what’s made America great is being a magnet of talent from all around the world. Some of our great companies have immigrant roots. The founder of Apple was a son of a Syrian refugee, the founder of Google was a son of a Russian immigrant, so we want to welcome those people who can create the companies that can create the jobs here," he said.

Trump's 2 p.m. visit to Snap-on was welcomed by the company. Snap-on released a statement on the event, saying, "We view his visit as an encouraging development in highlighting the essential nature of American manufacturing to our nation’s future."

The order, according to USA Today, will have little effect on some other visa programs like the H-2B seasonal worker program, which Trump uses at his resort, Mar-a-Lago in Florida.

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