President Joe Biden will order his government to conduct an evaluation of key US supply chains, including semiconductors, high-capacity batteries, medical supplies and rare earths.
The review, which will be led by members of both Biden’s economic and national security teams, will analyze the “ resilience and capacity of the U.S. manufacturing chains and defense industrial base to support national security. [and] emergency preparedness, “said a draft executive order seen by CNBC.
The text of the executive order is finalized and the final language may differ from the current draft.
The White Housel intends to close gaps in domestic production and supply chains that are dominated by or run by “countries that are or will become unfriendly or unstable”.
While China is not mentioned in the warrant, the directive is likely largely an attempt by the government 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 is gearing up for “extreme competition” with China.
The ongoing executive order is one of the government’s first tangible attempts to evaluate and support US business and defense interests through an in-depth review of where it receives important raw materials.
President Joe Biden comments on the state of the US economy and the need to pass coronavirus disease (COVID-19) support legislation during a speech at the State Dining Room at the White House in Washington, USA, Feb. 5, 2021.
Kevin Lemarque | Reuters
The White House review is in two stages.
The first will consist of a 100-day evaluation process during which officials analyze and report a handful of high-priority supply chains, including the manufacturing and packaging of semiconductors, high-capacity batteries and electric cars, rare earths and medical supplies.
The second phase – starting after the dedicated 100-day review – will extend the government’s research to several sectors, including the production of defense, health, energy and transportation equipment.
After those two are completed, a year after the warrant is issued, the task force will make recommendations to the president on possible actions, including diplomatic deals, trade route edits, or other means to ensure supply chains are not monopolized.
Some of the goods and components listed in the order include rare earths, a group of minerals used in the production of a variety of advanced technologies, including computer displays, 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 corridor have highlighted America’s dependence on China for rare earths as a potential strategic pitfall in recent years.
At a meeting of the Senate Committee on Energy and Natural Resources last year, Alaska Senator Lisa Murkowski asked panelist Simon Moores what would happen if China decided to cut the US off from the minerals.
Moores, general manager at Benchmark Mineral Intelligence, said such a move would leave the US with few options and prove devastating to the US economy.
“If lithium has anything to offer, China would stop arming rare earths (block exports to the US) and advance the economic route of exporting its processing knowledge to new mines around the world,” Moores wrote in 2019. Twitter. “more smart way to get a long-term supply chain.”
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