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On February 24, 2022, the White House released its annual
summary report on domestic supply chains. The report outlines
progress toward supply chain goals made during the first year of
the Biden administration, and discusses what it hopes to achieve on
supply chains going forward. On the same day, the U.S. Departments
of Defense, Homeland Security, Commerce, Energy, Agriculture,
Transportation, and Health and Human Services (collectively, the
“Departments”) released reports focused on supply chain
issues at their specific agencies and in industries they monitor.
These reports provide clues on where the administration will focus
its supply chain policy in the future.
Background
The White House and the Departments released these reports on
the one-year anniversary of President Biden signing Executive Order
14017, which directed the administration to conduct a
whole-of-government approach to address vulnerabilities in critical
supply chains.1 The White House report builds on
the June 2021 100-day reviews of the semiconductor, battery,
critical minerals, and pharmaceutical product supply
chains.2
While the reports primarily focus on progress made in improving
domestic supply chains in the first year of the administration,
they also discussed areas where the U.S. economy is overly reliant
on other countries. Areas featuring China are summarized in the
next section.
Focus on China
The White House and Departments reports include industries where
the U.S. is heavily reliant on China and identified trade policy
goals to reduce that dependence going forward.
The White House report explicitly states that “we must
reduce our dependence on China and other geopolitical competitors
for key products.”3 It expresses support for
a “friend-shoring” approach to offshore supply chains,
saying it will focus on building relationships with allies when
conducting trade policy.4 It provides as an example
of “friend-shoring” the recent agreements with the EU
to reduce tariffs on steel and aluminum products, and states it
expects deeper cooperation with countries like the EU and Japan on
this issue in the future.5
The supply chain reports from the Departments are more focused
on select products and industries where American industries are
heavily reliant on Chinese products. A list of reports that discuss
Chinese industry dominance is included below:
- Department of Energy: China dominates in the solar photovoltaic
industry and the global rare earth mineral extraction
industry.6 - Department of Transportation: “Three Chinese companies
account for 96 percent of the world’s dry cargo containers
and 100 percent of the refrigerated
containers.”7 - Department of Agriculture: China provides more than 70 percent
of imports for certain active pesticide ingredients, some of which
are not available at all in the United States.8 - Department of Homeland Security and Department of Commerce:
Chinese manufacturing in the information and communication
technology space creates cybersecurity risks.9 - Department of Defense: Defense procurement is threatened by
Chinese dominance in the lithium battery, casting and forging, and
microelectronics industries.10
The administration has already established that it is a policy
priority to reduce U.S. dependence on China, especially in these
critical industries. Legislation like the America COMPETES Act and
the U.S. Innovation and Competition Act, profiled in last
month’s newsletter, are already increasing investment in some
of these sectors, particularly in the semiconductor industry.
Similar investment and regulation in these spaces may be
coming.
Footnotes
1 The White House, The Biden-Harris
Plan to Revitalize American Manufacturing and Secure Critical
Supply Chains in 2022 (Feb. 24, 2022), https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/24/the-biden-harris-plan-to-revitalize-american-manufacturing-and-secure-critical-supply-chains-in-2022/.
2 The White House, Executive Order on
America’s Supply Chains: A Year of Action and Progress (Feb.
24, 2022) 4, https://www.whitehouse.gov/wp-content/uploads/2022/02/Capstone-Report-Biden.pdf.
3 Id. at 7.
4 Id. at 7.
5 Id. at 7.
6 Department of Energy, America’s Strategy to
Secure the Supply Chain for a Robust Clean Energy Transition (Feb.
24, 2022), 9, 13, https://www.energy.gov/sites/default/files/2022-02/America%E2%80%99s
Strategy to Secure the Supply Chain for a Robust Clean Energy
Transition FINAL.docx_0.pdf.
7 Department of Transportation, Supply Chain
Assessment of the Transportation Industrial Base: Freight and
Logistics (Feb. 24, 2022), 21, https://www.transportation.gov/sites/dot.gov/files/2022-03/EO
14017 – DOT Sectoral Supply Chain Assessment – Freight and
Logistics_FINAL_508.pdf.
8 U.S. Department of Agriculture, USDA Agri-Food
Supply Chain Assessment: Program and Policy Options for
Strengthening Resilience (Feb. 24, 2022), 7, https://www.ams.usda.gov/sites/default/files/media/USDAAgriFoodSupplyChainReport.pdf.
9 U.S. Department of Commerce and U.S. Department of
Homeland Security, Assessment of the Critical Supply Chains
Supporting the U.S. Information and Communications Technology
Industry (Feb. 24, 2022), https://www.dhs.gov/sites/default/files/2022-02/ICT
Supply Chain Report_0.pdf.
10 Department of Defense, Securing Defense-Critical
Supply Chains: An Action Plan Developed in Response to President
Biden’s Executive Order 14017 (Feb. 24, 2022), 19, 27,
35, https://media.defense.gov/2022/Feb/24/2002944158/-1/-1/1/DOD-EO-14017-REPORT-SECURING-DEFENSE-CRITICAL-SUPPLY-CHAINS.PDF.
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