Promotional products companies that count the federal government among their clients will have to adapt their sourcing to ensure items they provide meet newly approved standards in the Buy American Act.

President Joe Biden is implementing a new rule that requires any product the federal government purchases to contain 75% domestic content. Previously, 55% of the value of a product’s component parts had to be manufactured domestically to qualify as Made in the USA.

The regulation applies to procurement practices for all federal agencies and departments. The government will phase it in to give providers a chance to adapt. The percentage requirement will rise to 60% by October of 2022, then 65% in 2024, and finally 75% by 2029, officials said.

The purpose of the requirement is to bolster American manufacturing and help fuel the creation of more secure supply lines that are based domestically. Global supply chain problems have plagued the promo products market and many other industries during the COVID-19 pandemic.

The federal government spends more than $600 billion annually on goods and services.

The new rule could be a boon to suppliers in the branded merch market that offer U.S.-made products.

“This change will create more opportunities for small- and medium-sized manufacturers and their employees, including small and disadvantaged enterprises, from all parts of the country,” the Biden administration said in statement.  

The administration noted that it ultimately intends to implement a reporting requirement to ensure that products meet the heightened U.S.-made threshold. Details of that weren’t immediately available.

The vast majority of promo products sold in North America are made overseas, particularly in China and other countries in Asia. The supply chain fiascos of the last year and a half have led to increased calls in the promo industry to onshore more product manufacturing.

Nonetheless, supply chain and sourcing experts in promo say it’s likely that the industry will remain overwhelmingly reliant on foreign manufacturers for the foreseeable future. Even so, there could be an uptick in stateside production, particularly in certain categories, and additional manufacturing may move to countries nearer American shores.