The concept of comparative advantage states that the country that is capable of producing a good at a lower opportunity cost in comparison to some other country, then it has a comparative advantage in producing that particular good. If a country is capable of producing a good or a service at a lower cost as compared to any other country than it is said to have an absolute advantage in that particular good or service.
The United States have been known to be an importer of coffee beans and tea. This is mainly because there is demand for tea and coffee in the US beverage market but the weather in the country is not suitable for growing these products and therefore it is cheaper for the country to purchase these products from countries where these goods can be easily grown. Also, before shale oil led to US having oil reserves, the country was a major importer of oil and related products as well because the country did not have enough oil reserves. Now for a product that US has a comparative advantage in and exports to other countries might be financial assets. The country has a very mature bond market for government bonds. Therefore if an investor from any part of the world wants to hold risk free assets than he can opt for these bonds. Therefore US holds a comparative advantage in government backed bonds and exports it to the rest of the world ("Has The US Comparative Advantage Changed? Does This Affect Sustainability?", 2016). Another product in which US have a comparative advantage than most of the other countries is civilian aircrafts. Since the cost of producing these is high and US companies have achieved economies of scale and are monopolies now. Therefore the country has a comparative advantage in these as well.
If there is Buy American campaign than the campaign will rise the spending on domestically produced goods because the demand for such products will increase and the demand for imported goods will decrease. Now because of this the demand for dollars will increase because the consumption of domestically produced goods will require spending in dollars. Because of this the real exchange rate for the US dollars will appreciate in value and with time this appreciation will lead to zero change in trade balance. Since the actual level of net exports is dependent on domestic savings and the amount of investment, there will be no effect of the Buy American campaign on the net trade balance.
Buy American campaign does not necessarily help the local manufacturers or the consumers of goods in the country. There are many products and services that can be obtained at a much cheaper cost from abroad. By producing them locally, there is a chance that the cost of these goods and services will go up. Because of this the prices charged for them will also increase, thus adversely affecting the American consumers. This campaign will also reduce the demand for American goods as well because with increase in the demand for American products the dollar value will appreciate this will make the American goods less competitive in the global markets which can not be good for the American producers. Import have also been known to increase the standard of living for the Americans as it provides them with a wide variety of cheap goods produced abroad which is easy for them to buy as their incomes are much higher and therefore in their budget they can a vast variety of goods. Imports are also known to support more sixteen million jobs in the country. For example, there are several import related jobs like union jobs. Also, American manufacturers are themselves dependant on importing raw materials from abroad, which helps them lower their cost of production of goods and thus stay competitive. America itself is not a resource rich country, there; it imports a lot of chemicals from other countries cheaply (Marotta, 2013). If these chemicals have to be produced in the country, the supply and demand will raise the prices, thus making the American consumers suffer again. Therefore, in terms of the comparative advantage theory, Buy American campaign does not necessarily help America.
References
Has The US Comparative Advantage Changed? Does This Affect Sustainability?. (2016).
Retrieved 15 April 2016, from http://www.piie.com/publications/chapters_preview/47/3iie2644.pdf
Marotta, D. (2013). Forbes Welcome. Forbes.com. Retrieved 15 April 2016, from
http://www.forbes.com/sites/davidmarotta/2013/04/15/is-buy-american-un-american/#69216f77f853
