How ‘Made in USA’, the Buy American Act, and the Build America, Buy America Act Shape Industrial Site Selection
by Andrew Ratchford, on May 16, 2025 7:00:00 AM
Today’s economic landscape is evolving. Tariff concerns, shifting political dynamics, and potential shifts to federal incentive programs are impacting investment decisions for projects considering the United States. For some companies, it may be important to understand what requirements meet federal standards for products produced in the USA. Site Selection Group, a full-service location advisory, economic incentives, and real estate services firm, diligently monitors programs such as Made in USA, the Buy American Act (BAA), and the Build America, Buy America Act (BABA) to understand how each might impact a company’s investment decision.
Understanding these programs can shape your access to federal contracts, financing, and incentives, which your customers may also consider. This article compares each program, highlights key implications for U.S. investment, and explains how they could affect your manufacturing operation.
1. The Programs and Their Key Differences
Since 1933, the Buy American Act has guided federal purchases toward U.S. goods. The 2021 Infrastructure Investment and Jobs Act added the Build America, Buy America Act rules, widening that focus. The Federal Trade Commission (FTC) separately governs the Made in USA label. Though all three fall under the Made in America umbrella, their requirements differ and shape where manufacturers choose to locate. While Made in USA focuses on product marketing, BAA focuses on direct federal procurement, and BABA builds on this by applying similar requirements to projects receiving federal funding through grants or loans. The chart below highlights a few key differences between these programs.
Program |
Made in USA |
BAA |
BABA |
Type |
Federal Regulation | Federal Law | Federal Law |
Scope / Application |
Consumer product labeling | Direct federal procurement | Federally funded (e.g. grants or loans) |
Focus |
Brand integrity & consumer protection | Align federal spending with domestic manufacturing | Fortify domestic supply chains & revive US industrial capacity |
Requirement* |
Product must contain “All or virtually all” US content | ≥ 65 % US content (75% in 2029) | ≥ 55 % domestic content (~100% for some items, others are exempt) |
Enforcement Agency |
Federal Trade Commission (FTC) | Contracting agencies; GAO hears bid protests | Office of Management and Budget (OMB) - Made in America Office |
Enforcement Method |
Audits, fines, and corrective-label orders | Revoke contracts; non-compliant suppliers barred | Failure to award, loss of funding & penalties, & agency waiver process |
*Requirements and enforcement methods vary by application and material. Some exceptions and waivers apply.
Sources: Made in USA Labeling Rule (FTC): 16 CFR Part 323; Final Rule published at 86 Fed. Reg. 37022 (July 14, 2021); Buy American Act (BAA), 41 U.S.C. §§ 8301 – 8305 (Chapter 83, “Buy American”); Build America, Buy America Act (BABA), Pub. L. 117-58, div. G, Title IX, §§ 70901 – 70953 (enacted Nov 15, 2021, as part of the Infrastructure Investment and Jobs Act)
Federal incentives have thrust the BAA and BABA to the forefront of industrial planning. Both programs set domestic-content thresholds, usually measured by the share of component cost that is U.S.-sourced. Distinguishing inputs covered by absolute “all domestic” rules from those subject to cost percentages helps teams shape procurement strategies, anticipate waivers, and preserve incentive eligibility.
Under BABA-funded construction, iron, steel and listed construction materials must be fully U.S. made, while aggregates, cement and asphalt are exempt unless built into a manufactured item; agencies can waive the rule if domestic supply is impractical, not in the public interest or below 5% of total material cost, according to FEMA’s rules for example. Mapping which inputs face strict- versus cost-based rules lets teams plan procurement, pursue waivers, and keep incentives. Finished goods produced in a BABA-built plant are generally outside BABA, yet customer preferences can impose similar targets — for example, automakers boost domestic content so electric vehicles qualify for the Clean Vehicle Credit.
2. Why Domestic Content Rules Matter to Manufacturers
- Site Selection: Proximity to qualified U.S. suppliers simplifies compliance, reduces shipping costs, and accelerates production schedules.
- Market Access: A credible Made in USA label creates brand value. BAA/BABA compliance opens the door to lucrative government projects or to suppliers seeking to comply with these requirements.
- Funding Eligibility: Federal incentives require documented domestic content. Companies that meet the rules may gain access to grants, loans, and tax credits.
- Risk Mitigation: Contract loss, financial penalties, grant or loan revocation, and reputational harm follow non-compliance. Active management of supply chains prevents these setbacks.
- Stacked Incentives: Some states layer property tax abatements, training grants, and infrastructure support on top of federal programs, but only for compliant projects.
3. Staying Ahead of Regulatory Change
As the BAA threshold increases and BABA rules remain fluid, firms must factor future content demands into U.S. siting and expansion. New projects should weave compliance into location strategy, supply-chain planning, due diligence, and incentive talks from day one, while existing plants need a plan to audit suppliers, update records, and budget for retrofits as standards tighten.
- Track Threshold Shifts: Congress and federal agencies frequently adjust content percentages. It is crucial to track how these adjustments may impact a project.
- Document Every Component: Maintain detailed bills of material, supplier affidavits, and audit trails to substantiate U.S. origin.
- Calculate Total Exposure: Quantify the financial impact of contract loss versus the cost of supply chain realignment.
- Engage Experts: Site Selection Group provides holistic market intelligence and permit and compliance strategy in real time.
4. Proven Strategies for Domestic and Foreign Manufacturers
Building on the importance of staying ahead of shifting domestic content rules, the suggestions below provide a practical starting point. Whether you are scoping a new investment or optimizing an existing facility, use these action items as a framework to tailor site, supply chain, and incentive strategies to your project’s unique goals.
- Supply Chain Realignment: Identify domestic alternatives for critical inputs; negotiate long-term contracts to lock in price and volume.
- Vertical Integration: Acquire or build upstream capacity to guarantee the domestic origin of key components.
- Compliance Audits: Conduct periodic internal reviews to confirm domestic content percentages and maintain up-to-date documentation.
- Digital Traceability Systems: Implement digital platforms to track component origin, automate compliance reporting, and respond quickly to audits or waiver requests.
5. Applicability Checklist: Questions to Ask
Before committing capital, manufacturers should ask the following questions to determine which domestic content rules may govern their project:
1. Is my product intended for consumer retail sales?
If yes, do I plan to market my product with a Made in USA claim?
2. Will any portion of the project involve selling goods directly to a federal agency?
If yes, the Buy American Act (BAA) thresholds and waivers will likely apply.
3. Does my project rely on federal grants, loans, or other financial assistance (e.g., IIJA, CHIPS, DOE, USDA)?
If yes, the Build America, Buy America Act (BABA) requirements may govern materials and construction.
4. What percentage of my finished product’s cost is attributable to components sourced outside the United States?
If greater than 45 percent, plan for supply chain adjustments or a potential non-availability waiver.
5. Have I mapped the procurement flow from raw material to the finished good?
If not, establish a step-by-step documentation process that satisfies FTC, BAA, and BABA audit standards.
6. Are state or local incentives contingent upon meeting BAA/BABA thresholds?
If yes, failure to comply could jeopardize the entire incentive package.
7. Do I have internal resources or third-party advisors dedicated to tracking threshold changes, waiver processes, and enforcement trends?
If not, consider reaching out to qualified consultants to provide these services.
8. Do your customers have a Made in America threshold requirement for products they purchase from you?
If yes, you may need to alter your supply chain to meet customer demands despite not being subject to BAA/BABA or Made in USA directly.
Answering these questions early helps project teams choose compliant sites, structure supply chains, and secure incentives with confidence.
Conclusion
Understanding Made in USA, BAA, and BABA requirements unlocks powerful advantages. Companies that align site selection with domestic content mandates gain market access, secure government incentives, and reduce risk.
Site Selection Group stands ready to help. Our full-service location advisory team delivers data-driven site evaluations, robust logistics strategies, and incentives compliance support while integrating seamlessly with engineers, architects, legal counsel, and other professional partners to keep your project on schedule and in compliance.
