Biden Administration Moves to Fix Supply Chain Bottlenecks
By Katie Rogers and Brad Plumer, The New York Times
June 8, 2021
Credit…Doug Mills/The New York Times
WASHINGTON — The Biden administration on Tuesday outlined a swath of actions and recommendations meant to address supply chain disruptions caused by the coronavirus pandemic and decrease reliance on other countries for crucial goods by increasing domestic production capacity.
In a briefing with reporters, White House officials said the administration had created a task force that would tackle near-term bottlenecks in construction, transportation, semiconductor production and agriculture. The group will be led by Mr. Biden’s cabinet secretaries.
“They are going to be bringing together all stakeholders to really diagnose the problems, understand what’s going on out there in these markets and see what actions can be taken to close those vulnerabilities,” said Sameera Fazili, the deputy director of the National Economic Council.
The officials also outlined steps that had been taken to address an executive order from President Biden that required a review of critical supply chains in four product areas where the United States relies on imports: semiconductors, high-capacity batteries, pharmaceuticals and their active ingredients, and critical minerals and strategic materials, like rare earths.
“This is about making sure the United States can meet every challenge we face in the new era,” Mr. Biden said in February, when he signed the order.
The review was governmentwide. Cabinet members were ordered to provide reports to the White House within 100 days. The move was intended to address concerns about supply chain resiliency and long-term competition with China.
The Department of Health and Human Services, for instance, will use $60 million from the $1.9 trillion coronavirus relief bill to develop technologies to increase domestic production of active ingredients in key pharmaceuticals. The Interior Department will work to identify sites where critical minerals could be produced in the United States. And several agencies will work on creating supply chains for new technologies that will reduce reliance on imports of key materials.
The Biden administration also signaled that it was prepared to use trade policy to bolster domestic supplies of key minerals and components. As part of that effort, the Office of the United States Trade Representative said it would establish a so-called strike force that could propose actions against overseas companies deemed to be engaged in unfair trade practices.
The Commerce Department will evaluate whether to investigate the global trade of neodymium magnets under Section 232 of the Trade Expansion Act of 1962. The Trump administration wielded that law to impose tariffs on foreign steel and aluminum, after concluding that domestic production of those materials was essential for national security.
As part of his plans to address climate change, Mr. Biden wants Americans to drive millions of new electric vehicles and get more of their energy from renewable sources like wind and solar power. But experts have long pointed out that the shift to cleaner energy will require vast supplies of critical minerals, many of which are currently produced and processed overseas.
Most of the world’s lithium, a key ingredient in the batteries that power electric vehicles, is mined in Australia, China, Chile and Argentina. China dominates global production of rare earth minerals such as neodymium, used to make magnets in wind turbines. It has also largely cornered the market in lithium-ion batteries, accounting for 77 percent of the world’s capacity for producing battery cells and 80 percent of its raw-material refining, according to BloombergNEF, an energy research group.
The United States lags far behind other countries in manufacturing many clean energy technologies, leaving it heavily reliant on imports.
The Biden administration has vowed to bring back more of that manufacturing and mining, but progress has been slow. In the United States, companies are racing to unlock lithium supplies in states like Nevada and North Dakota, though those efforts face opposition because of their environmental effects. The country also has only one mine that produces rare earth minerals, in Mountain Pass, Calif.
As part of its announcement on Tuesday, the Biden administration said it would work to identify new domestic sites where such critical minerals could be mined with environmental safeguards, asking Congress to increase funding for a mapping program at the U.S. Geological Survey.
The Energy Department announced that it would offer loans for companies that could sustainably refine, process and recycle rare earths and other materials used in electric vehicles. The agency on Tuesday will also release a plan to develop a domestic supply chain for lithium-ion batteries.
The Energy Department has $17.7 billion in authority to issue loans under the Advanced Technology Vehicles Manufacturing Loan Program, which Congress created in 2007 and used in 2010 to support the electric-vehicle manufacturer Tesla in its early days. In its announcement, the agency said it would seek to offer loans to manufacturers of advanced battery technology that established factories in the United States. It also announced a new policy in which future funding of new clean-energy technologies would require recipients to “substantially manufacture those products in the United States.”
Semiconductors — a key component in cars and electronic devices — were also another key research area for officials, though they did not describe immediate plans to increase production. A global semiconductor shortage has forced several American auto plants to close or scale back production and sent the administration scrambling to appeal to allies like Taiwan for emergency supplies. Instead, the 100-day review report said Congress should support a $50 billion investment in domestic semiconductor manufacturing and research.
“Generally speaking, consistent with the proposal in Congress, we would expect to encourage both foreign and American companies to invest here in the United States,” Peter Harrell, the senior director for international economics and competitiveness for the National Security Council, told reporters. He pointed out that companies like Samsung have explored ways to invest more in chip manufacturing in the United States.
The effort is partly a push for the president’s $1 trillion infrastructure plan, which could fund some of the research and job training to bring American workers up to speed on producing advanced technologies. The recommendations also call for those new jobs to be unionized.
“We must focus on creating pathways for all Americans to access well-paid jobs with a free and fair choice to join a union and bargain collectively,” Ms. Fazili said.
The effort comes as the Senate is poised to pass a huge industrial policy bill to counter China’s rising influence, a rare bipartisan development as lawmakers suddenly embrace an enormous investment in semiconductor manufacturing, artificial intelligence research, robotics, quantum computing and a range of other technologies.
Nick Vyas, the executive director of the Center for Global Supply Chain Management at the University of Southern California’s Marshall School of Business, praised the report as a holistic effort but said it and the industrial policy bill were both long overdue actions to address an overreliance on foreign governments — specifically China — for materials.
“This cannot be an issue that divides us on either side of the political spectrum,” Mr. Vyas said in an interview. “We need to do a lot of makeup work from the past 25 to 30 years.”