Home Depot Accused of Using China Products in ‘Buy American’ Campaign

“Buy American.” That’s what American manufacturing workers want to protect American jobs and what the government thought it was doing when it took in shipments of The Home Depot Inc. (NYSE: HD) products. But the country’s largest home improvement chain made a big boo-boo. Its own photograph touting that America’s federal dollars get more bang for the buck at Home Depot tells a very different tale.

Home Depot is being investigated by the U.S. Department of Justice for violating the Buy American Act because it provided Chinese-made materials for public projects. The law requires all materials used in construction of public projects originate in the U.S. It has been revised several times to accommodate various trade agreements with designated countries such as Canada and Israel, but China-made materials are clearly out of the equation. That’s a big black eye for Home Depot if recent whistleblower claims are true.

First of all, it’s hard to believe that no one in the government’s receiving office noticed the “Made in China” labels on many of the products being shipped from Home Depot. As the story goes, Home Depot’s error was discovered while investigating evidence in a separate whistleblower lawsuit.   It is even harder to believe that the federal government doesn’t expect many of the products it receives nowadays would not be made in America.

If the government thinks the law has value, then why are American companies allowed to get so many of their parts outside our borders – essentially playing middle man with a “made in the USA” label? And why is it okay for the government to buy some of our military equipment, which protects us at home and abroad, from foreign countries? Because our government knows that free trade benefits America as much as it does other countries, that’s why.

Some people may see prosecuting violators under the law as a way to send a message to China and other protectionist countries that their goods aren’t welcome if ours are not. But in this growing global economy, we may be hurting ourselves more at work and at the retail stores.

If we keep the law as is and selectively prosecute those who may unknowingly violate it, then how can we insist that China and other protectionist countries open their borders to American goods?

I’m not saying that I wouldn’t like to see more American dollars stay at home, but it appears that the law is being used more by whistleblowers looking for a big payout than by the government to change corporate behavior of achieve better trade agreements.

As of this writing, Cynthia Wilson did not own a position in any of the stocks named here.

Article printed from InvestorPlace Media, https://investorplace.com/2011/06/home-depot-made-in-america-china-scandal/.

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