Topline
President Biden on Wednesday is expected to sign an executive order that will direct the federal government to review supply chains in critical industries including semiconductors and rare earth minerals in an effort to reduce the United States’ reliance on foreign-made critical materials, but it’s not yet clear if the review will lead to any long-term policy or trade changes.
Key Facts
The executive order will jumpstart a 100-day review of the supply chains of four key products—pharmaceuticals, semiconductors, rare earth metals, and large capacity batteries used in electric cars—and a longer term review of six more sectors including defense, public health, and food production.
It’s another signal from the White House that the federal government wants to promote U.S. factories and manufacturing and avoid the shortages of crucial supplies that occurred early on in the pandemic.
It’s also a clear signal that the administration has its eye on competition from China, which produces many of the critical products that the U.S. relies on, including semiconductors and computer components, rare earth metals, pharmaceuticals, and medical supplies.
The order will allow federal agencies to make recommendations to address supply chains risks that the review identifies, but the long-term policy implications aren’t clear yet.
“A review is just a review— no immediate consequences,” former Clinton administration Commerce Department official William Reinsch told the Washington Post.
The order comes amid a severe global shortage of semiconductors—a critical electronic component used in everything from cars to smartphones—that has already forced some North American automakers to slow down production.
Crucial Quote
"For the long term, I think what the review is going to find is we need to have more semiconductors made here in the good 'ol U.S. of A," John Neuffer, CEO of the Semiconductor Industry Association, told NPR. "Right now, most of them are made overseas. And I think this pandemic has put in focus the reality that some of our supply chains need to be rebalanced.” Analysts from Bank of America echoed that view earlier this month: “In our view, semiconductor self-sufficiency will be as important to every country/region in the next century, as iron/steel/energy self-sufficiency has been in the prior periods.”
Key Background
Last month, Biden cited similar shortages of medical supplies and safety equipment in the early days of the pandemic after signing a “Buy American” executive order aimed at shoring up domestic manufacturing and encouraging the federal government to buy more products made in the United States. “As this pandemic has made clear,” Biden said, “we can never again be in a position where we have to rely on a foreign country that doesn’t share our interest in order to protect our people during a national emergency.” Biden administration officials are characterizing the new supply chain directive as a successor to the Buy American plan, the New York Times reported.
Further Reading
Biden Signs ‘Buy American’ Executive Order—Here’s What It Means For Businesses (Forbes)
Biden Will Be More Predictable Than Trump On Trade, But Don’t Expect Tariff Rollbacks Any Time Soon (Forbes)
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February 24, 2021 at 11:26PM
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Here’s What Biden’s Supply Chain Executive Order Means For U.S. Businesses - Forbes
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