Biden orders review on cracks in critical supply chains

President Joe Biden wants his administration to identify and fix potential cracks in supply chains that could cause shortages of critical items like chips inside cars, minerals in flat-screen televisions, batteries in electric vehicles and ingredients in life-saving medicines.

The President directed his team in an executive order on Wednesday to conduct a review to determine which products used by Americans in their everyday lives — or that are necessary to keep the country safe — could be vulnerable to disruptions.

And, perhaps more critically, he wants to find out how much of that supply is dependent on places such as China.

“We need to stop playing catch-up after the supply chain crisis hits. We need to prevent the supply chain crisis from hitting in the first place,” Biden said at the White House before signing the order.

“In some cases,” Biden added, “building resilience will mean increasing our production of certain types of elements here at home. In others it’ll mean working more closely with our trusted friends and partners, nations that share our values so that our supply chains can’t be used against us as leverage.”

Already, US automakers have slowed production because of a shortage of semiconductor chips, which are mostly manufactured abroad, including in China. And shortages of medical equipment at the start of the coronavirus pandemic also exposed vulnerabilities in the United States’ ability to manufacture supplies in a crisis, leaving front-line workers dependent on products from abroad.

Now, Biden wants his administration to conduct a 100-day review to identify gaps in domestic manufacturing and find places where critical products are reliant on countries that are either unfriendly or could become so.

The review will focus on four areas to determine where the vulnerabilities lie: semiconductors (or computer chips); large capacity batteries, like those used in electric vehicles; pharmaceuticals and drug ingredients; and rare earth metals that are used in everything from flat screens to advanced weapons.

The executive order he signed Wednesday also directed a review in six sectors to identify potential supply chain weakness. They include defense, public health, information technology, transportation, energy and food production.

An administration official, previewing the action, said the review was intended to get the United States “out of the business of reacting” to shortages and to instead “get into the business of getting ahead” of potential disruptions.

“We’re not simply planning to order up reports. We’re planning to take actions to close gaps,” the official said.

And while the order did not specifically name China, and officials insisted it should be viewed more broadly, the urgency in ensuring critical products and supplies are not beholden to Beijing is clear.

“We really do see this as a resilient supply chain executive order, not a China executive order,” the official said, “though clearly one of the vulnerabilities we have in supply chains is the potential for strategic competitor nations to try to use control of supply chains against us.”

Gen. John Hyten, vice chairman of the Joint Chiefs of Staff, said Tuesday that Covid-19 revealed “huge vulnerabilities” in the US supply chain.

“I’ll just say without going into any classified detail that the supply chain is weak, and we have to take a hard look at that, because without that kind of supply chain, we cannot move nimbly, quickly, we cannot stay ahead of the threats that will continue to morph, and we’re going to have a hard time building affordable capabilities in order to do that,” Hyten said.

“We just do not have a robust resilient supply chain right now. We have to take a hard look at that,” he added.

On Wednesday, Biden met with a bipartisan group of lawmakers to discuss the semiconductor issue specifically.

Emerging afterward, he said it was one of the best meetings he’s had since taking office.

“It was like the old days; people were actually on the same page,” Biden said.

As the pandemic dampened demand for new cars, automakers cut their orders for chips. But increased demand for computers and cell phones meant the chips went into those products, leaving a shortage when auto production ramped back up.

That is the type of vulnerability the administration hopes to identify and work to avoid in the future.

“We’ve been mapping and analyzing the chip shortage to understand what got us to this,” an official said, calling the semiconductor shortage a lesson for the supply chain issue more broadly.

As a candidate and now as President, Biden has prioritized returning jobs to the United States and placed an emphasis on manufacturing.

Officials said his executive order fit within those ideals, but acknowledged that not all supply chains could be returned entirely to the United States. Instead, they said they wanted to find areas where the US is overly dependent on a single country or supplier that could cause havoc if the supply is interrupted.

On rare earths, an official acknowledged the US would not necessarily be able to mine minerals only found abroad — including, in many cases, in China. Instead, the review might identify ways to lessen dependence on a single source, including by recycling or finding additional countries from which to source materials.

The administration could use a mix of incentives to return supply chains to the United States, along with limits on imports, including the potential for new tariffs, officials said.