The White House on Tuesday announced a plan to manufacture more crucial medicines in the United States through an expanded use of the Defense Production Act, a relic of the Cold War that gives the president the authority to direct industrial production for national defense purposes.
The decision comes after the coronavirus pandemic exposed vulnerabilities in an already-fragile supply chain system.
It’s also part of a broader strategy to reduce shortages of key goods that President Biden says are critical for national security while also making the U.S. more competitive against its main economic rival, China.
Tuesday’s announcement follows the administration’s 100-day supply chain review, the result of an executive order signed by Biden in February.
The review was tasked with studying four key sectors:
- semiconductor chips;
- large capacity batteries, such as those used in electric vehicles;
- and critical minerals.
“For too many years, we’ve let our production capacity for critical goods migrate overseas rather than making investments to support U.S. manufacturing and U.S. workers,” a senior administration official said on a call with reporters.
Biden intends to use Section 232 of the Trade Expansion Act to explore whether imports of Chinese neodymium magnets — commonly used in cars — harm national security, and whether protections like tariffs are needed. The Section 232 tariffs were famously used by former President Donald Trump to protect U.S. steel and aluminum producers from imports, and have been challenged at the World Trade Organization.
The administration also detailed plans for a public-private consortium that will choose 50 to 100 drugs from the Food and Drug Administration’s essential medicines list and focus on producing them in the U.S. The White House intends to invest $60 million on domestic drug production for key drugs that are in short supply.
Biden will also establish a “trade strike force” led by the U.S. trade representative that would have the power to enforce some type of penalty for unfair trade practices that erode critical supply chains.
“We’re not looking to wage trade wars with our allies and partners,” an administration official said. “We’re looking at very targeted products where we think there are effective tools we could deploy to strengthen our own supply chains and reduce vulnerabilities.”
Here’s what else is in the review:
– Mining: The review calls for the Department of Interior to “identify sites where critical minerals could be produced and processed in the United States.”
– Advanced batteries: The review also outlines steps toward building a domestic supply chain for advanced batteries.
– Semiconductors: When it comes to addressing the semiconductor shortage — which experts say could last until next year — the review doesn’t offer as clear guidance. It recommends Congress pass a bill that could help boost domestic production and R&D.
The White House has also increased its push to work with allies and partners on imports of materials, particularly on semiconductors. Intel is expanding its capacity and Samsung is also considering investments.
The review insists any long-term change would require deeper investments, such as the major infrastructure plan which remains up for debate in Congress.
The White House is also announcing plans for a supply chain disruptions task force to tackle bottlenecks in some key industries: semiconductors; homebuilding and construction; transportation; and agriculture and food.