President Joe Biden will lead his administration to conduct a review of major U.S. supply chains, including semiconductors, high-capacity batteries, medical supplies, and rare earth metals.
The assessment, led by members of Biden’s economic and national security teams, will analyze the “strength and capability of U.S. manufacturing supply chains and the defense industrial base to support national security. [and] emergency preparedness, “according to a draft executive order seen by CNBC.
The text of the executive order is being finalized and the final language may vary from the current draft.
The White Housel plans to review gaps in national supply and manufacturing chains dominated by “countries that are or are likely to become unfriendly or unstable.”
While the order does not mention China, the directive is likely to be largely an effort by the administration to determine the dependence of the U.S. economy and military on a critical group of Chinese exports. Biden said earlier this month that his White House is preparing for “extreme competition” with China.
The pending executive order is one of the administration’s first tangible efforts to assess and defend U.S. business and defense interests through a thorough review of where it receives key raw materials.
President Joe Biden made statements on the state of the U.S. economy and the need to pass legislation on coronavirus disease aid (COVID-19) during a speech in the state dining hall of the White House in Washington, USA, February 5, 2021.
Kevin Lemarque | Reuters
The review 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 the manufacture and packaging of semiconductors, electric and high-capacity car batteries, metals of rare earths and medical supplies.
The second phase, which begins after the specific 100-day review, will expand the administration’s research to various sectors, including the production of defense equipment, public health, energy and transportation.
Once these two years have been completed, one year after the order is issued, the working group will make recommendations to the chair on possible actions, including diplomatic agreements, trade route modifications or other ways to ensure that supply chains are not monopolized.
Some of the products and components on order include rare earth metals, a group of minerals used in the production of various 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 corridor have in recent years highlighted the U.S. dependence on China for rare earths as a possible strategic trap.
During a Senate Energy and Natural Resources Committee meeting last year, Alaska Sen. Lisa Murkowski asked panelist Simon Moores what could happen if China decided to cut the U.S. from minerals.
Moores, CEO of Benchmark Mineral Intelligence, said the move would leave the United States with few options and would be devastating to the U.S. economy.
“If lithium were to happen, China would stop arming rare earths (blocking exports to the U.S.) by favoring the economic route of exporting its processing knowledge to new mines around the world,” Moores wrote on Twitter on 2019. “a smarter way to get a long-term supply chain.”
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