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  HOME | USA

US Supply Chains in Key Sectors to End Reliance on China

WASHINGTON -- President Joe Biden on Wednesday launched a comprehensive review of US national strategy regarding obtaining supplies in key sectors, such as microchips, with an eye toward ending dependence on production by - and imports from - "foreign rivals," referring specifically to China.

The US must ensure the production scarcity, commercial adjustments, natural disasters and potential actions by foreign rivals and adversaries never again leave the country vulnerable, said White House Press Secretary Jen Psaki at her daily press briefing in announcing the move.

Biden signed an executive order establishing a deadline 100 days out for authorities to present a detailed report on the reevaluation of the country's strategic global supply chains.

With this measure, in addition to helping revitalize the US economy with an eye toward getting the country out of the crisis created by the coronavirus pandemic, Biden is seeking to diversify US sources for vital products.

Psaki appeared together with Sameera Fazili, the deputy director of the National Economic Council, and Peter Harrell, the White House director for International Economics and Competitiveness.

The order is designed to ensure that "America's supply chains can sustain any crisis, as well as supporting jobs across the country."

"Our supply chains should not be vulnerable to manipulation by competitor nations," he said. "We are going to get out of the business of reacting to supply chain crises as they arise, and get into the business of preventing future supply chain problems."

Among the strategic products the official cited are high-capacity electric batteries, pharmaceuticals and medical items, food, microchips and so-called "rare-earth" minerals, which are indispensable for the manufacture of smartphones, wind turbines and batteries for electric vehicles.

The US does not want to repeat situations like the scarcity of facemasks that arose at the start of the pandemic or the current scarcity of microchips that has brought production to a halt at several Ford and General Motors automobile manufacturing plants.

Semiconductor Industry Association chief John Neuffer told National Public Radio in an interview that the shortages resulting from the pandemic have shown how quickly problems can spin out of control if just one link in a supply chain breaks down.

"For the long term, I think what the review is going to find is we need to have more semiconductors made here in the good 'ol U.S. of A.," said Neuffer, whose organization represents firms like Intel and Qualcomm, adding that "Right now, most of them are made overseas. And I think this pandemic has put in focus the reality that some of our supply chains need to be rebalanced."

The executive order does not name any specific country, but White House officials who presented the announcement in a telephone conference call acknowledged that Washington depends too much for too many items on China.

Senate Majority Leader Chuck Schumer said Congress has begun drafting a bill designed to promote new investment to beef up US semiconductor manufacturing capacity, acknowledging this sector is a "dangerous weak spot" for the US economy and national security.

"We cannot rely on foreign processors for the chips. We cannot allow China to get ahead of us in chip production," he said.

Two weeks ago, Biden held a two-hour telephone conversation with his Chinese counterpart, Xi Jinping, after which he said that Beijing "will eat our lunch" if the US does not "step up."

The US has to "get moving," said Biden.

Relations between China and the US deteriorated drastically during the presidency of Donald Trump and the new White House has made it clear that there are many obstacles to overcome with Beijing.

The bilateral collisions in areas such as trade, diplomacy and technology were an ongoing and constant feature of Trump's presidency, and although Biden has promised a different focus, his administration wants to maintain the pressure and does not seem to be in a hurry to bring the trade war with Beijing to an end.
 

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