President Joe Biden will instruct his government to review major U.S. supply chains, including semiconductors, high-capacity batteries, medical supplies, and rare earth metals.
The evaluation, 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 supply chains and defense industry base to support national security. [and] emergency preparation, “according to a draft of an 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 plans to review gaps in local manufacturing and supply chains that are dominated by “countries that are or will become unfriendly or unstable”.
Although China is not mentioned in the order, the directive is likely a major attempt by the government to determine how dependent the U.S. economy and military are on a critical group of Chinese exports. Biden said earlier this month that his White House was ready for ‘extreme competition’ with China.
The pending executive order is one of the first tangible efforts by the government to evaluate and sharpen U.S. business and defense interests through a thorough overview of where it receives the most important raw materials.
President Joe Biden comments on the state of the US economy and the need to pass coronavirus disease legislation (COVID-19) during a speech at the State Dining Room in the White House in Washington, USA, February 5, 2021.
Kevin Lemarque | Reuters
The evaluation of the White House will take place in two phases.
The first will consist of a 100-day review process during which officials will analyze and report on a handful of high-priority supply chains, including semiconductor manufacturing and packaging, high-capacity and electric motor batteries, rare earth metals and medical supplies.
The second phase – which starts after the specific 100-day review – will expand the administration’s investigation into various sectors, including the production of defense, public health, energy and transport equipment.
After the two are completed, one year after the order is issued, the task force will submit recommendations to the president on possible actions, including diplomatic agreements, amendments to trade routes or other ways to ensure that supply chains are not monopolized.
Some of the merchandise and components listed in the order included rare earth metals, a group of minerals used in the manufacture of a variety of advanced technologies, including computer monitors, modern weapons, and electric vehicles.
The White House did not respond to a request for comment from CNBC.
Defense analysts and politicians on both sides of the political path have highlighted in recent years the U.S. dependence on China for rare earths as a possible strategic pitfall.
At a meeting of the Senate Energy and Natural Resources Committee last year, Alaska Senator Lisa Murkowski asked panel member Simon Moores what could happen if China decided to ward off the US from minerals.
Moores, managing director of Benchmark Mineral Intelligence, said such a move would leave the US with few options and devastate the US economy.
“If there’s anything going on with lithium, China will not favor the rare earth weapons (which block US exports) that prefer the economical way of exporting its processing knowledge to new mines around the world,” he said. Moores wrote on Twitter in 2019. ‘smarter way to get long-term supply chain. ‘
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