U.S. President Biden signed an executive order late today calling for a 100-day review of key supply chains including semiconductors, large capacity batteries, pharmaceuticals, and rare-earth elements. The scarcity of chips for automakers – mostly sourced from Europe – is perhaps the most pressing among several pandemic-related supply chain bottlenecks. More broadly, worries over supply chain security have risen in recent years, exacerbated by trade disputes with China.
Besides the 100-day review, which the administration acknowledges won’t quickly resolve problems, Biden will also call for a one-year review covering six sectors from technology to food production according to multiple reports. The efforts are not aimed a single country, according to Administration officials, but are aimed broadly at a landscape of shifting rivals and at boosting domestic supply capabilities.
“We need to make sure that supply chains are secure and reliable,” Biden said at the White House. “I’m directing senior officials in my administration to work with industrial leaders to identify solutions to this semiconductor shortfall.” Automakers Ford and GM, for example, were forced to idle or slow production on some models because of chip supply problems.
The Wall Street Journal reported:
“Administration officials said the government intends to encourage domestic production with incentives such as job-training programs and business loans, in addition to using the federal procurement process for more American-made purchases. The administration will also explore limiting some imports, officials said. But no specifics were offered Wednesday.
“The officials said the administration could use the Defense Production Act, which Mr. Biden is using for vaccine production and securing more Covid-19 equipment, to spur more domestic manufacturing of critical products. The government is expected to also look to public-private partnerships while aiming to shore up relations with allies to address common supply vulnerabilities, such as semiconductors, they said.”
Early reaction from both parties (Republicans and Democrats) and industry has been favorable. There had been a bipartisan meeting with Biden prior to issuing the executive order. AP reported that Sen. John Cornyn (R, Texas) attended the meeting and said Biden was very receptive during the conversation. “He said, ‘we’re all in,’” Cornyn said. “We all understand this is important, not only to our economy, but to our national security, because these cutting edge, high-end semiconductors – they operate on everything from the F-35 fifth generation stealth fighter to our cell phones.”
Link to Wall Street Journal coverage (Biden Orders Broad Supply-Chain Review Amid Chip Shortages): https://www.wsj.com/articles/biden-to-address-chip-shortages-supply-chain-problems-with-executive-action-11614160803
Link to Washington Post coverage (Biden orders sweeping review of U.S. supply chain weak spots): https://www.washingtonpost.com/business/2021/02/24/biden-supply-chain/