US economy

Biden orders review of critical foreign supply chains


Joe Biden will order a review of critical supply chains to reduce the US’s dependence on China and other rivals for everything from rare earths and drug ingredients to semiconductors.

The US president signed an executive order on Wednesday requiring federal agencies to conduct 100-day reviews of supply chains for semiconductors, pharmaceuticals, electric vehicle batteries and critical minerals used in manufacturing products such as cars and weapons.

“We’re going to get out of the business of reacting to supply chain crises as they arise and get into the business of preventing future supply chain problems,” said Peter Harrell, NSC senior director for international economics.

The Financial Times reported this month that Biden was preparing to issue the order. During the presidential campaign, he pledged to reduce the kind of supply chain shocks that emerged at the start of the pandemic because of a lack of masks and protective gear for healthcare workers.

Speaking while signing the executive order, Biden said that shortages of protective gear for American healthcare workers “should never have happened.”

“We shouldn’t have to rely on a foreign country, especially one that doesn’t share our interests or our values,” Biden added.

The order will also require separate one-year reviews for six sectors including defence, public health, biological preparedness, IT, transportation, and energy and food production.

A senior official said it was “not singling out any country” but would look at where the US was “excessively dependent” on a rival, including China.

“We’re looking at the risks posed by dependence on competitor nations,” the official said, citing the example of being too reliant on China for rare earths.

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Across the US government, agencies will be required to assess both the federal procurement and commercial supply chains for products and sectors that come under their jurisdiction.

One critic of the approach said the new administration should move more quickly to address supply chain vulnerabilities by building on studies that were conducted during the Trump administration.

“China is moving fast, and the Biden team does not have the luxury of studying for six months to a year before moving out”.

Ashley Craig, a trade lawyer and partner at Venable, said the Biden team was engaging in a “careful balancing act” because it wanted to tackle supply chain vulnerabilities but “did not want to agitate trading partners who are just coming back in from the cold” after Donald Trump’s “America first” approach.

The move comes as the White House rushes to address a shortage in semiconductors for the car industry after several US plants, including those operated by Ford and General Motors, were forced to temporarily stop manufacturing.

Jake Sullivan, US national security adviser, and Brian Deese, head of the White House National Economic Council, have been working with the car industry and US allies to try to identify chokepoints in the supply chain.

“We are actively engaging with the industry to make sure that the automotive industry has the chips that it needs to the greatest extent practical,” said the official. “We have also been engaging with foreign countries and foreign companies in order to encourage increased production around the world.”

But the official added there was no “magic bullet to solve the near-term problems”, which he said underscored the need for reviews of supply chains.

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The US semiconductor industry has seized on the shortage to lobby for government funding for domestic chip manufacturing, which it says is crucial to securing supply chains and maintain an edge over China. 

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