The outbreak of the coronavirus pandemic has and is still teaching many countries the advantages of being self-sufficient. And, the United States of America is no exception. Owing to the ongoing situation, and looking at its sure continuity in the coming years, the Biden administration has announced a series of steps that it plans to take in order to enhance and strengthen the country’s supply chains, domestic manufacturing capabilities of key products, and address related vulnerabilities.
Also Read: How to Diversify Your Supply Chain
The U.S. President Joe Biden had ordered his administration to conduct a 100-day inter-agency review of the nation’s supply chain in February 2021. The report of this review was released earlier this month.
The report sprawls across several hundred pages and focuses majorly on four products that are critical to the U.S economy at large. These include the production of large-capacity lithium batteries, semiconductors, active pharmaceutical ingredients, and rare earth minerals.
Here are some initiatives that the administration plans to take to boost each of these key products.
Initiatives by the Biden administration to boost the production of key products in the U.S.
- Large-capacity lithium batteries: The Department of Energy is planning to develop a domestic lithium battery supply chain & logistics in the coming 10-years to enable the country to mass produce the batteries that help power the electric vehicles. The department’s Advanced Technology Vehicles Manufacturing Loan Program will further distribute approximately $17 billion to support new research and manufacturing efforts in this area.
- Rare earth minerals: The Department of Interior will create a special task force that will focus on identifying the sites where critical minerals can be produced and processed in the nation. It will also develop the capacity for sustainable production, refining, and recycling of approximately 17 rare earth metals which are in high demand in the cellphone and auto industry.
- Semiconductors: Many major auto manufacturing plants in the nation have idled due to the shortage of chips in the country. The Biden administration has released a statement saying it will collaborate with the private sector to increase supply-chain transparency and sort the issue at the earliest.
- Advanced pharmaceutical ingredients: The nation’s Department of Health and Human Services will use nearly $60 million to develop novel platform technologies to increase the domestic manufacturing capacity for API. Greater production of API in-house will reduce the need to rely on global supply chains in the case of a shortage of medications.
Within the 100-day supply chain review report, the administration also announced that it will take many broader initiatives. Let’s take a look:
Other Initiatives planned by the Biden administration
One of the first initiatives includes the allocation of $100 million as an additional grant to support state-led traineeship expansion efforts wherein workers will be trained to staff these new projects. The Department of Labor will administer these grants.
The Department of Energy will release a new policy to ensure that all innovations developed through DOE’s Science and Energy Programs will require the awardees to substantially manufacture their merchandise in the United States and create good-paying jobs for the domestic labor.
The Biden administration is also planning to form a Supply Chain Disruptions Task Force to address discontinuities in the supply chain network. The task force will be jointly headed by the Secretaries of Commerce, Transportation, and Agriculture. It will primarily focus on bringing stakeholders together to address the supply/demand mismatches in the home building and construction industry, followed by the semiconductor, transportation, and agriculture and food industry.
In addition to these efforts to boost the country’s domestic supply chain, the Biden administration also listed out many new steps it plans to take to combat unfair foreign trade practices that have, over the years, eroded the global supply chain.
One of these steps will be to create a trade strike force led by the U.S. Trade Representative’s office. The task force will majorly identify unilateral and multilateral enforcement actions the U.S. can take to penalize the nations that it believes are engaging and/or promoting unfair trade practices across the globe.
It will also look for opportunities to use trade agreements to strengthen collective approaches to make the supply chain network more resilient with the U.S. and its allies.
The other enforcement-related actions will initiate an investigation into neodymium magnets. These rare earth magnets are used in motors and electronics by civilians and the defense industry. If the investigation concludes that the U.S. national security will be threatened by foreign suppliers of neodymium magnets, the country will consider imposing restrictions or tariffs on neodymium imports.
Regarding Section 232 that was invoked twice by the former U.S. President Donald Trump, stating his justification for imposing broad steel and aluminum tariffs, these tariffs are still in place. The Biden administration has not released any updates on this matter.
Besides the 100-day supply chain review report, the Biden administration will launch a series of one-year reviews of six critical industrial base sectors under its second phase of supply chain initiatives under E.O. 14017. These sectors include defense, information technology, transportation, public health, energy, and food production. The administration is expected to submit its report to the White House by February 2022.
Also Read: 6 Technologies Shaping the Supply Chains
What is the importance of supply chain in international trade?
With the pace at which global trade is being done in the global market today, supply chains are becoming all the more important. They not only help boost customer satisfaction, reduce operational costs, improve the financial status of a company, but also enable businesses to widen their horizons.
An effective supply chain helps:
- Lower the cost of doing business in both the domestic market and the international trade market.
- Reduces a company’s purchasing and production expenses, further enabling them to explore new and foreign markets.
- Build necessary partnerships to support the company’s future growth.
- Maintain a balance in the demand and supply of products in the domestic as well as international market.
- Provide more effective and efficient customer services all the time.
The ultimate aim of effective supply chain & logistics management is to streamline everything from the production of a product, its delivery to any unexpected natural disasters. It gives companies the courage to enter new business arenas and diversify their activities.