As we are making our way into 2025, the landscape of U.S. trade policy has seen numerous shifts with the Trump Administration. One of the first major actions taken by President Trump was signing the America First Trade Policy Executive Order in January 2025. This executive order aims to prioritize American interests in global trade. This order also explicitly addresses the Buy American Act (BAA) and will most likely have an impact on the Trade Agreements Act (TAA). These executive actions mark a new era in trade policy. Let’s dive in and provide a bit of a refresher on the differences between BAA and TAA and how they tie together with the previous and new administration.
BAA vs TAA
As a refresher, federal agencies are encouraged to procure domestic materials and products under the Buy American Act (BAA). Revisions have been made to the policy in the last few years to not only encourage but also strengthen domestic supply chains and the overall American workforce. How does this tie into TAA? As the two policies are similar in terms of subject matter, they have very different functions.
The Trade Agreements Act (TAA) places restrictions on the federal acquisition of products from certain Countries of Origin (COO), so it indirectly encourages more domestic and trade friendly production. There are more key distinctions between the two laws, so we will go over each one and how they are still relevant today.
Getting to Know the Buy American Act of 1933
Passed in 1933, the Buy American Act (BAA) is often considered the foundation of U.S. federal acquisition policies and remains a key compliance regulation as of today. It was signed into law by President Hoover on his last day in office. Before President Roosevelt took over during the Great Depression, the BAA was part of a broader effort to revive the American economy, which included more prominent initiatives like the New Deal. The primary takeaway from the BAA policy is that government procurement should prioritize sourcing labor and products domestically.
The BAA greatly applies to you if you are a manufacturer and provide domestic goods. If you are a reseller, it’s important you understand the regulations around BAA and if your manufacturer is following them.
However, like many regulations, the BAA does include exceptions. For example, delegated procurement authorities within the government can waive the provisions of the BAA for specific purchases if sourcing a domestic product is at least 25% more expensive than an alternative.
The Buy American Act (BAA) and the Final Rule
The Buy American Act (BAA) has gone through consistent updates over the years and will continue to see further updates as it remains a fundamental part of U.S. domestic procurement policy. In 2020, the Trump Administration released an Executive Order raising the domestic end product requirement from 50% to 55%. This was built upon under the Biden Administration, with the introduction of the "Final Rule" of the BAA, which was implemented in 2022.
The Final Rule is one key mechanic of the BAA that ensures that these updates are implemented as the years go by, regardless of who leads the executive branch.
More specifically, this rule introduced a series of gradual increases to the domestic products acquisition threshold. The threshold was raised from 55% to 60% in October 2022, 65% in October 2024, and will ultimately reach 75% by 2029. This ongoing effort underscores the commitment to bolstering U.S. manufacturing and reducing reliance on foreign-made goods for federal contracts. Consistent with previous versions of the law, a 55% "fallback threshold" remains in place for situations where domestic products are either too costly or unavailable.
BAA and the Latest EO
The most recent EO on America First Trade Policy mentions the BAA in Section K, directing the U.S. Trade Representative to assess the impact of all trade agreements on federal procurement, as governed by Executive Order 13788 from the previous administration. This also ties a bit into the TAA which we’ll dive into below.
Trade Agreements Act (TAA) of 1979
The Trade Agreements Act (TAA) of 1979 plays a crucial role in international product acquisition. While the federal government aims to source most of their products domestically manufactured, there are numerous industries where inefficiencies related to cost, supply, or capability make it impractical to operate solely within the U.S. This is where the TAA comes in to govern foreign acquisition.
The TAA, as we recognize it today, is rooted in earlier legislation and has been updated to remain relevant to our current trade policies. It originated from the Trade Act of 1974, which gave President Ford the authority to negotiate trade agreements on behalf of the United States.
Congress codified the TAA in 1979 under 19 U.S.C. 2501-2581, which brought significant purchasing power back to the U.S. The TAA also aimed to lower the overall costs of importing products that would otherwise be burdened by higher import duties, such as tariffs, or the costs associated with domestic production.
How does TAA have a direct impact on GSA contractors? The TAA requires that all “final products” sold through your GSA Schedule must be either manufactured in the U.S. or “substantially transformed” in the U.S. or in another designated country.
TAA and Your GSA Schedule
It is absolutely imperative to familiarize yourself with the list of TAA-compliant and non-compliant countries. Please also note that this list may be updated as time progresses. But generally, the TAA-compliant countries fall into one or more of the following categories:
- World Trade Organization Government Procurement Agreement (WTO GPA) members
- Free Trade Agreement (FTA) countries
- Least developed countries (e.g., Angola, Bhutan, Uganda, Yemen)
- Caribbean Basin countries (e.g., Aruba, Barbados, Haiti)
For a complete list of TAA-designated countries, check our TAA Compliant Country list.
Another key restriction regarding these designated countries is that the TAA specifies that products imported from them must either be directly made "substantially transformed" in TAA-compliant countries.
The question of what constitutes "substantial transformation" often arises among our clients. The answer can vary depending on the situation. For more detailed information on this subject, you can read our blog on "substantial transformation" and advisory rulings.
Remaining Compliant with Your GSA Schedule
When doing business with the federal government, it’s critical to your GSA Schedule contract (and future contracting endeavors) that you remain in compliance.
As mentioned previously, contractors need to be aware of any changes or updates made to BAA or TAA. Under the new administration, we can expect to see both of these regulations shift. While the designated TAA countries don’t change very often, if the manufacturing of a product changes or you add new products over the years, you must be vigilant about whether they abide by TAA rules.
If you’re a contractor that has recognized that some of your products shouldn’t be listed, it’s is your responsibility to ensure that these products are removed from your contracts as soon as possible to avoid problems and concerns.
Maintaining GSA Schedule Compliance
GSA contractors are required to maintain compliance from the moment their contract is awarded, which can be quite demanding. We highly recommend reaching out to a consultant to discuss your specific needs, seek advice, or gather general information about GSA Schedules. If you need help managing your GSA Schedules with regulations such as BAA or TAA, we would be happy to help you.
