Biden Administration Unveils Plans to Shore-Up Supply Chains

The White House aims to bolster national security efforts by reshoring production of critical products like semiconductors, batteries, rare earth minerals and pharmaceuticals.

The White House on Tuesday unveiled a report with new initiatives to shore up supply chains for critical resources like semiconductors, batteries, rare earth minerals and pharmaceuticals. This all-of-government approach could bear positive economic implications, create new American jobs, and benefit our country’s national security.

The report issued on Tuesday was the culmination of a 100-day long supply chain review conducted by a wide array of federal government agencies, initiated by President Biden’s Executive Order 14017.

We’ve long sounded the alarm about the dangers of America’s supply chain vulnerabilities, and we’ve also argued in favor of many of the initiatives outlined by the White House. There is “a lot to like” in the report, according to AAM President Scott Paul.

Specifically, Paul pointed to ideas in the report like leveraging government procurement and R&D to support domestic manufacturing, along with consumer initiatives like electric vehicle purchase incentive programs for American-made vehicles. Utilizing the Defense Production Act will also help provide stability for domestic producers, Paul argued.  

But there’s more to be done, Paul continued:

“Above all, the United States must boost its own domestic production capabilities. The U.S. Innovation and Competitiveness Act, which is being taken up by the Senate this week, could prove to be critical to these efforts. 

“The COVID-19 pandemic unfortunately showed us what happens when we do not have the ability to make the supplies we need in a crisis. But the country has an opportunity to learn from its past mistakes, and the White House report offers a good starting point.”

Jake Sullivan and Brian Deese, the National Security Advisor and Director of the National Economic Council, respectively, oversaw the White House’s review. They noted that the 100-day report makes clear that “more secure and resilient supply chains are essential to our national security, our economic security, and our technological leadership.”

The pair went on to stress how the supply-chain review will grow the U.S. economy, boosting innovation, creating new jobs, and even helping to address racial and gender inequality by establishing new opportunities for groups that have historically been left behind.

Moreover, by reshoring domestic manufacturing, the U.S. will be able to loosen its dependence on countries like China for the resources our modern economy depends on. This is a major boon to US national security, where experts have long-warned of the dangers of depending on foreign powers for essential resources. It will also ensure American competitiveness internationally, allowing the United States to continue to be a global economic leader for decades to come.

Finally, by reshoring production of critical resources, the U.S. will be able to uphold more ethical manufacturing — as foreign producers often commit a number of human rights violations and environmental disregard.

President Biden recently said it best himself: “In the competition for the 21st century, the future will be built right here in America.”

As to the specific initiatives being proposed, we are happy to see that each would address an important aspect of US supply chains, and help to reshore domestic production.

For example, one program being spearheaded by the Department of Energy will use the Advanced Technology Vehicles Manufacturing Loan Program to deliver $17 billion for the manufacturing of electric vehicle batteries. Currently, EV batteries are largely made abroad, but as demand for them is expected to skyrocket, American workers will miss out on the jobs of the future if manufacturing does not move back to the United States. These new loans will work to accomplish that.

Another program from the Department of the Interior will lead a search for new domestic locations where rare earth minerals can be mined and processed. The U.S. lags far behind competitors in the production of these minerals that are essential to modern technology products — especially the semiconductors that power our phones, computers, cars and consumer electronics. The report also calls on Congress to spend up to $60 billion to boost US semiconductor manufacturing.

The initiatives go beyond just boosting domestic manufacturing as well, working to tackle unfair trade incentives that have long dogged American manufacturers. The Biden administration plans to establish a “Trade Strike Force” to identify and combat trade practices from foreign nations like China that hurt the competitiveness of US manufacturers. The report identifies neodymium magnets, a key component in electric motors, as a potential target for tariffs under Section 232, an initiative successfully used in the steel and aluminum industries to boost US production.

“Establishing a trade strike force to tackle unfair practices could be impactful, if it is utilized early and often,” Paul said. “The report repeatedly mentions responsible sourcing and environmental standards, both here and abroad. That rhetoric must translate into reality, because those disparities are responsible for big job losses and factory closures. It’s also important to press China and other countries on unfair trade practices like state-owned enterprises, subsidies, and export-driven growth models.”

Notably, the report recognizes the immense purchasing power of the federal government and calls for strengthening of Buy America requirements to ensure that taxpayer dollars go towards boosting domestic manufacturing. The report argues that federal procurement “has the potential to support U.S. production of critical products by creating a stable source of demand for US-made products — thereby providing an incentive for the private sector to invest in U.S. manufacturing.” 

In all, the report is full of a litany of initiatives to boost U.S. manufacturing, and this blog post could go on for a hundred pages just listing them all.

There’s certainly more work to do, of course. Many of these policies will not be possible without Congressional funding, though Congressional leaders are working on some of that right now with the bipartisan competitiveness legislation that’s expected to pass the Senate this week.

The Biden administration will continue to work on their end as well. A second phase of reporting on supply chain resiliency will conclude in February 2022 and focus on the defense, telecommunications, agriculture and food industries, among others.

We’ll keep covering future updates on the blog. Stay tuned!