President Joe Biden will instruct his administration to conduct a review of major U.S. supply chains, including those for semiconductors, high-capacity batteries, medical supplies and rare earth metals.
The assessment, led by members of Biden’s economic and national security teams, will analyze “the resilience and capacity of American supply chains for the manufacturing and industrial defense base in support of national security [and] Emergency preparedness, “according to a draft regulation implemented by CNBC.
The text of the Regulations is currently being finalized and the final language may differ from the current draft.
The White House plans to fill gaps in domestic manufacturing and supply chains that are “dominated or passed through nations that are becoming or becoming unfriendly or unstable”.
While the ordinance does not mention China, the directive is likely largely an attempt by the government to determine how dependent the US economy and military are on a critical group of Chinese exports. Earlier this month, Biden said his White House was preparing for “extreme competition” with China.
The upcoming executive order is one of the government’s first concrete efforts to evaluate and prop up American business and defense interests through a thorough verification of the origins of key raw materials.
President Joe Biden speaks on the state of the US economy and the need to pass legislation in support of coronavirus disease (COVID-19) during a speech in the State Dining Room of the White House in Washington, USA, on February 5, 2021 .
Kevin Lemarque | Reuters
The White House review will be carried out in two phases.
The first consists of a 100-day review process during which officials analyze and report on a handful of high-priority supply chains, including those involved in manufacturing and packaging semiconductors, high-capacity batteries and batteries for electric cars, rare earth metals and medical supplies.
The second phase – starting after the specific 100 day review – will expand the administration’s investigation to various sectors, including defense, public health, energy, and transportation equipment manufacturing.
After these two are completed, one year after the decision is passed, the task force will make recommendations to the president on possible action, including diplomatic agreements, changes in trade routes, or other ways to ensure supply chains are not monopolized.
The White House did not respond to CNBC’s request for comment.
Defense analysts and politicians on both sides of the political aisle in recent years have highlighted the U.S.’s reliance on China for rare earth metals – a group of minerals used in the manufacture of advanced technologies, including computer screens, state-of-the-art weapons, and electric vehicles – as a potential strategic trap.
During a meeting of the Senate’s Energy and Natural Resources Committee last year, Senator Lisa Murkowski, R-Alaska, asked panelist Simon Moores what could happen if China decided to cut the US off of minerals.
Moores, executive director of Benchmark Mineral Intelligence, said such a move would leave the US few options and would prove devastating to the US economy.
“If lithium were to be considered, China would stop arming rare earths (blocking exports to the US) in order to facilitate the economic route of exporting its processing expertise to new mines around the world,” wrote Moores in 2019 Twitter smarter way to achieve long term supply chain. “