President Joe Biden will instruct his administration to conduct a review of key US supply chains, including semiconductors, high-capacity batteries, medical supplies and rare earth metals.
The assessment, which will be led by members of Biden’s economic and national security teams, will examine “the resilience and capacity of US manufacturing supply chains and the defense industry base to support national security.” [and] emergency preparedness “, according to a draft executive seen by CNBC.
The text of the executive order is being finalized and the final language may vary from the current draft.
The White House intends to review shortcomings in domestic production and supply chains that are dominated or cross “nations that are or are likely to become unfriendly or unstable.”
Although the order does not mention China, the directive is likely largely an effort by the administration to determine how dependent the US economy and military are on a critical group of Chinese exports. Biden said earlier this month that his White House was preparing for “extreme competition” with China.
The pending executive order is one of the administration’s first tangible efforts to assess and support US business and defense interests through a thorough review of where it receives key raw materials.
President Joe Biden commented on the state of the US economy and the need to adopt coronavirus aid legislation (COVID-19) during a speech in the White House state living room in Washington, USA, February 5, 2021.
Kevin Lemarque | Reuters
The review of the White House will take place in two stages.
The first will consist of a 100-day review process, during which officials will analyze and report a handful of high-priority supply chains, including semiconductor manufacturing and packaging, electric and high-capacity car batteries, metals from rare earths and medical supplies.
The second phase – which starts after the specific 100-day review – will extend the administration’s investigation to various sectors, including the production of defense equipment, public health, energy and transport.
Following the completion of the two, one year after the order is issued, the working group will make recommendations to the Chair on potential actions, including diplomatic agreements, changes in trade routes or other ways to ensure that supply chains are not monopolized.
Some of the products and components listed in the order included rare earth metals, a group of minerals used in the production of a variety of advanced technologies, including computer screens, state-of-the-art weapons, and electric vehicles.
The White House did not respond to CNBC’s request for comment.
Defense analysts and politicians on both sides of the political aisle have highlighted the US’s dependence on China for rare earths as a potential strategic trap in recent years.
Last year, at a Senate meeting of the Committee on Energy and Natural Resources, Alaska Sen. Lisa Murkowski asked panelist Simon Moores what might happen if China decided to cut the United States from minerals.
Moores, general manager at Benchmark Mineral Intelligence, said such a move would leave the United States with few options and prove devastating for the US economy.
“If lithium is anything to go by, China would stop arming rare earths (blocking exports to the US) by favoring the economic path of exporting its processing knowledge to new mines around the world,” Moores wrote on Twitter in 2019. “one way smarter to get a long-term supply chain
This is breaking news. Please check again for updates.