Biden Orders Review to Bolster Supply Chain Resiliency

“The key is particularly with dramatic change or rapid change, you’ve got to do a good job of forecasting and you got to think holistically, you got to look at the entire sort of lifecycle of the operation,” said Scott Miller, senior adviser on the global economy at the Center for Strategic and International Studies.

The Trump administration also pushed for investment in shoring up supply chains, mostly through tax cuts incentivizing businesses to bring manufacturing back to the U.S. In April 2020, then President Donald Trump invoked the Defense Production Act to clear up supply-chain issues encountered in the manufacturing of ventilators and production of N95 face masks.

Officials said Biden’s strategy to protect the supply chain is different than Trump’s protectionist approach. “This work will not be about America going it alone,” said Sameera Fazili, Deputy Director of the National Economic Council in a briefing to reporters “We are committed to working with partners and allies to reduce the vulnerabilities.”

China Focus
Biden’s executive order does not mention any particular country and look at U.S. reliance on foreign suppliers overall.

“One of the vulnerabilities we are looking at is where we might be excessively dependent on competitors in Asia, obviously including China,” the senior administration official said.

The U.S. is dependent on China in a range of critical industries from pharmaceuticals to defense, in part because American firms rely on cheap Chinese exports.

“The corporate quest over the past 25 years to cut supplier costs, with insufficient concern for resilience, has saddled the nation with gaping strategic vulnerabilities in the supply chains for certain critical materials, medications and technology inputs,” said authors of a 2020 study by the Center for Energy Studies at Rice University and the U.S. Naval War College’s China Maritime Studies Institute.

Being dependent on an adversary is not a good spot to be in said Northeastern University’s Sanders. “Having said that, this policy really looks at a really broad picture in terms of U.S. production, manufacturing, economy,” she added. “So, it’s not just China.”

Rare Earth
China is reportedly looking into curbing exports of rare earth minerals that are crucial to U.S. defense contractors that manufacture military weaponry.

“The government wants to know if the U.S. may have trouble making F-35 fighter jets if China imposes an export ban,” said a Chinese government adviser as reported by the Financial Times last week.

China is the world’s dominant producer of rare earths, a group of 17 minerals used in electric vehicles, consumer electronics and military equipment.

“While we call them rare earths as a share of the Earth’s crust, they’re not particularly rare,” said Miller pointing to a U.S. Geological Survey report of American states that have rare earth mineral deposits.

Pini Althaus, CEO of USA Rare Earth, a company developing a U.S.-based supply chain for the minerals, is lobbying the government to expand domestic mining and processing.

“There is already surging demand for lithium and EV battery materials, and U.S. manufacturers will need new sustainable supply to meet near term goals this decade,” Althaus said.

Rare earth minerals are processed using toxic chemicals and produce air emissions with harmful elements, such as fluorine and sulfur, and wastewater that contains excessive acid, and radioactive materials.

Despite the significant environmental concerns, Miller said the U.S. should look into expanding this sector, particularly if there is a national security need.

“There’s activity in this space,” Miller said. “The question is … what’s [the federal government’s] role in accelerating or stabilizing the market?”

Patsy Widakuswara is VOA’s senior White House correspondent. This article  is published courtesy of the Voice of America (VOA).