Biden administration announces plans to strengthen critical supply chains

President Joe Biden (C) speaks during a tour of the Cuyahoga Community College Manufacturing Technology Center, on May 27, 2021, in Cleveland, Ohio.

Nicholas Kamm | AFP | Getty Images

WASHINGTON — The Biden administration announced a series of steps it will take in order to strengthen critical U.S. supply chains, building up domestic manufacturing capabilities for key products and addressing existing vulnerabilities.

President Joe Biden in February ordered a 100-day interagency review of domestic supply chains.

The outcome of this review and the resulting policy recommendations make up a new report totaling several hundred pages, which was released on Tuesday.

The report's initial recommendations focus on four products critical to the U.S. economy: large capacity lithium batteries, rare earth minerals, semiconductors and active pharmaceutical ingredients.

• Large capacity lithium batteries: The Department of Energy is aiming to release a 10-year plan to develop a domestic lithium battery supply chain capable of producing the batteries that power electric vehicles. The agency's Advanced Technology Vehicles Manufacturing Loan Program will distribute $17 billion in an effort to support new research and manufacturing efforts in the United States.
• Rare earth minerals: The Department of Interior will lead a task force to identify sites where critical minerals could be produced and processed in the United States." The report said the U.S. will develop the capacity for "sustainable production, refining, and recycling" of the 17 rare earth metals used in cellphones, cars and magnets, while meeting high environmental standards.
• Semiconductors: As the nation grapples with a chip shortage that has idled major auto manufacturing plants, the White House said it will work with the private sector to increase supply-chain transparency.
• Advanced pharmaceutical ingredients: The Department of Health and Human Services will use authority granted under the Defense Production Act to commit approximately $60 million to "develop novel platform technologies to increase domestic manufacturing capacity for API."

In addition to these steps, designed to boost supplies of specific products, the administration also announced several broader initiatives.

To help train the workers that will be needed to staff these new projects, the White House will announce $100 million in additional grants to support state-led apprenticeship expansion efforts. The grants will be administered by the Department of Labor. 

The Department of Energy will announce a new policy that requires awardees of DOE research and development grants to "substantially manufacture those products in the United States."

Along with these efforts to bolster domestic supply chains, the Biden administration also laid out new steps to combat "unfair foreign trade practices," which it says have contributed to the erosion of supply chains around the world.

One of these will be the creation of a "trade strike force" led by the U.S. Trade Representative's office. The strike force will aim to identify "unilateral and multilateral" enforcement actions the United States can take to punish countries that it believes are engaging in unfair trade practices. According to a senior administration official, the strike force will focus on developing U.S.-China trade policies.

The other enforcement-related action will be an evaluation, led by the Department of Commerce, of whether to initiate an investigation into neodymium magnets under Section 232 of the Trade Expansion Act.

The rare earth magnets are used in motors and electronics by civilians and the military. If the investigation were to conclude that U.S. national security was threatened by foreign supplies of neodymium, it could open the door to import restrictions or tariffs. 

Then-President Donald Trump invoked Section 232 twice, citing it as his justification for imposing broad steel and aluminum tariffs. Those tariffs are still in place, and Biden has not said whether he will lift them. 

A senior administration official who briefed reporters on condition of anonymity ahead of the formal announcement emphasized that Biden's trade policy actions are fundamentally different from Trump's trade wars because they are carefully targeted. 

"We're not looking to wage trade wars with our allies and partners," said the official. "We're looking at very targeted products where we think there are effective tools we could deploy to strengthen our own supply chains and reduce vulnerabilities."

The entire supply chain report is available here.

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