Just a note that usually most of the USA content on those types of Buy America complaint assemblies is assembly labor, not components.
Err, it does and doesn't at the same time. This is a core part of my work at the moment, since I work in manufacturing where federally funded infrastructure projects ultimately make up a decent chunk of business - meaning my work life is presently
interesting.
It's a puzzle, since every federal agency has a slightly nuanced take on what exactly Buy America means - and not that it fully applies in this case as the T used state funding to purchase these cars which aren't tied to the specifics of the federal regulations, but for the sake of simplicity I'm going to assume that CRRCs claims of US content at the component level meet the FTA's guidelines.
The FTA definition can be simplified as purchase cost of major components must exceed 70% domestic content in the aggregate. Explicitly, final assembly labor of putting major components together cannot be included in the domestic content test. So, if the shell is 100% Chinese and composes 30% of the total value, the remaining 70% of major components must be 100% domestic content. The test for if a major component itself is domestic is whether the subcomponents are; the FTA guidance explicitly includes subcomponents one step removed from the final component. Those subcomponents are also required to be at least 70% US content
in the aggregate for the major component to count as domestic. Think of a subcomponent such as the armature inside a major component such as the traction motor. (the CFR citation below predates the 2016 FAST act raising the threshold from 60-70%, but note that compliant subcomponents then count as if they were 100% domestic content once at the components level). That means someone like Mitsubishi, supplying the traction motor, also had to include 70% by value Buy America compliant armatures, brushes, windings etc. in such a regime, only 30% of subcomponents could be of foreign manufacture (notwithstanding foreign made of domestic content). As the test is purchase cost or cost of production, that does mean that the subcomponent manufacturers is also including their domestic labour costs as part of the final content test. And yes, a subcomponent could largely consist of largely imported sub-sub components two steps removed.
But, being so far removed, one can assume that tariffs would make up a a significantly smaller portion of the cost relative to domestic labour.
The major problem with the new tariffs is how foreign content is calculated - for purposes of Buy America content tests, the cost of a foreign component explicitly includes two additional items other than the actual purchase price - "transportation costs to the place of incorporation into the manufactured product ...
and any applicable duty." Lets simplify. Our hypothetical widget currently meets the FTA requirements with 70% US content and 30% foreign content by value from Canada. With a 25% tariff (Duty), that foreign component suddenly jumps to 37.5% - and the final assembly is no longer Buy America compliant. There is zero guidance out there about what this means yet for open procurements, since our current administration doesn't value regulation. Keep in mind his executive order limiting new CFR regulations - to implement the rules that take this into account, the FTA will have to go through the rulemaking process to eliminate 10 others.
