Biden orders supply chain review for 4 industries

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Gavin Bade
·3 min read
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President Joe Biden will sign an executive order on Wednesday to review the global supply chains used by four key industries in an effort to avoid the shortages in medical equipment, semiconductors and other goods seen as critical during the pandemic.

China reliance targeted: Biden’s order will institute 100-day reviews of the global producers and shippers for: computer chips used in consumer products; large-capacity batteries for electric vehicles; pharmaceuticals and their active ingredients; and critical minerals used in electronics.

The reviews will seek to determine whether U.S. firms in these sectors are relying too much on foreign suppliers, particularly those in China, a senior administration official told reporters. They will also consider other vulnerabilities, like extreme weather and environmental factors.

“Clearly we are looking at the risks posed by dependence on competitor nations, but that is only one of a range of risks we are looking at,” the administration official said.

The order will also direct yearlong reviews for six sectors: defense, public health, information technology, transportation, energy and food production.

Those reviews will be “modeled after the process the Defense Department uses to regularly evaluate and strengthen the defense industrial base,” the official said.

Remedies unclear: If risks are identified in the supply chains for critical sectors, the administration will aim to push those companies to move their suppliers out of countries like China and back to the U.S. mainland or allied nations.

“Resilient supply chains are not the same thing as all products being made in America,” said a second senior official. “That’s not our intention here.”

Any strict directive from the White House for firms to relocate to the U.S. would risk angering allies like Canada and the European Union, which Biden already irked by strengthening "Buy American" provisions on his first day in office by making it more difficult for foreign companies to supply the U.S. government.

But how the White House will prod companies remains to be seen. If the risks are dire, the Biden administration could use the Defense Production Act, a Cold War-era emergency law, to force companies to produce certain goods domestically. Or the president could work with Congress to fashion incentives and worker-training programs to get suppliers to relocate to the U.S. or allies.

For now, the White House is not ”taking anything off the table,” the first official said, and strategies to fix the supply chains will depend on the weak spots identified.

Shortages abound: The order comes as automakers around the U.S. reel from a global shortage in semiconductors — the computer chips in everything from cell phones to SUVs — forcing manufacturers to halt auto production for weeks.

Risks to the battery supply chain are also apparent. Ford and Volkswagen recently told U.S. trade authorities that they would have to delay production of their new electric vehicle lines if their battery supplier — Korean firm SK Innovation — was blacklisted for intellectual property theft. The International Trade Commission subsequently blocked those batteries from entering the U.S., but gave the automakers a grace period to find new suppliers.

Those situations both came on the heels of widespread shortages of masks and other medical protective gear early in the pandemic, which affected hospitals and average consumers alike. The White House says it aims to get out in front of those issues next time around.

“We’re going to get out of the business of reacting to supply chain crises as they arise, and get into the business of getting ahead of future supply chain problems,” one of the senior administration officials said.