President Joe Biden will direct his administration to conduct a review of key U.S. supply chains including semiconductors, high-capacity batteries, medical supplies and rare earth metals.
The assessment, which will be led by members of both Biden’s economic and national security teams, will analyze the “resiliency and capacity of the American manufacturing supply chains and defense industrial base to support national security [and] emergency preparedness,” according to a draft of an executive order seen by CNBC.
The text of the executive order is being finalized and the ultimate language could vary from the current draft.
The White Housel plans to review gaps in domestic manufacturing and supply chains that are dominated by or run through “nations that are or are likely to become unfriendly or unstable.”
Though the order does not mention China, the directive is likely in large part an effort by the administration to determine how reliant the U.S. 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.
President Joe Biden delivers remarks on the state of the U.S. economy and the need to pass coronavirus disease (COVID-19) aid legislation during a speech in the State Dining Room at the White House in Washington, U.S., February 5, 2021.
Kevin Lemarque | Reuters
The pending executive order is one of the administration’s first tangible efforts to evaluate and shore up American business and defense interests through a thorough review of where, and from which countries, it receives key raw materials.
The White House review will take place in two phases.
The first phase 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 car batteries, rare earth metals and medical supplies.
The second phase — beginning after the specific, 100-day review — will broaden the administration’s investigation to various sectors, including the production of equipment for defense, public health, energy and transportation.
After those two are complete, one year after the order is issued, the task force will submit recommendations to the president on potential actions, including diplomatic agreements, trade-route edits or other ways to ensure supply chains are not monopolized.
Some of the commodities and components listed in the order included rare earth metals, a group of minerals used in the production of a variety of advanced technologies, including computer screens, 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 aisle have in recent years highlighted U.S. dependence on China for rare earths as a potential strategic pitfall.
During a Senate Energy and Natural Resources Committee meeting last year, Sen. Lisa Murkowski of Alaska asked panelist Simon Moores what might happen if China decided to cut off the U.S. from the minerals.
Moores, managing director at Benchmark Mineral Intelligence, said that such a move would leave the U.S. with few options and prove devastating to the U.S. economy.
“If lithium is anything to go by, China would stop short of weaponising rare earths (blocking exports to US) favouring the economic route of exporting its processing knowhow to new mines around the world,” Moores wrote on Twitter in 2019. “A far more savvy way to gain long term supply chain.”
This is breaking news. Please check back for updates.