World’s largest contract chipmaker says it is expanding capacity to keep prices reasonable.
The United States will target China with a new “strike force” to combat unfair trade practices, the Biden administration announced on Tuesday, as it rolled out findings of a review of US access to critical products, from semiconductors to electric-vehicle batteries.
The “supply chain trade strike force”, led by the US trade representative, will look for specific violations that have contributed to a “hollowing out” of supply chains that could be addressed with trade remedies, including towards China, senior administration officials told reporters.
Officials also said the Department of Commerce was considering initiating a Section 232 investigation into the national security impact of neodymium magnet imports used in motors and other industrial applications, which the US largely sources from China.
President Joe Biden ordered the review of critical supply chains in February, requiring executive agencies to report back within 100 days on risks to the US access to critical goods like those used in pharmaceuticals as well as rare earth minerals, for which the US is dependent on overseas sources.
Though not explicitly directed at China, the review is part of a broader Biden administration strategy to shore up US competitiveness in the face of economic challenges posed by the world’s second-largest economy.
“Semiconductors are the building blocks that underpin so much of our economy, and are essential to our national security, our economic competitiveness, and our daily lives,” US Commerce Secretary Gina Raimondo said in a statement.
Today, the Biden-Harris Administration released its 100-day supply chain review of critical industries.
— Secretary Gina Raimondo (@SecRaimondo) June 8, 2021
The US faced serious challenges getting medical equipment during the COVID-19 epidemic and now faces severe bottlenecks in a number of areas, including computer chips, stalling production of goods such as cars.
The White House on Tuesday said efforts to strengthen supply chains “are critical because, as the COVID-19 pandemic and resulting economic crisis have shown, structural weaknesses in both domestic and international supply chains threaten America’s economic and national security”.
“While amplified by the public health and economic crisis, decades of underinvestment and public policy choices led to fragile supply chains across a range of sectors and products.”
US agencies are required to issue more complete reports a year after Biden’s order, identifying gaps in domestic manufacturing capabilities and policies to address them.
A senior official told reporters the US had faced unfair trade practices from “a number of foreign governments” across all four of the supply chains covered in the initial review, including government subsidies and forced intellectual property transfers.
“Obviously, a number of Chinese industrial policies have contributed to vulnerable US supply chains,” the official said. “I think you are going to see this strike force focusing in feeding into some of our China policy developments.”
The official added the US was not looking to “wage trade wars with our allies and partners”, the official added, noting the strike force would be focused on “very targeted products”.
But the senior officials offered little in the way of new measures to immediately ease chip supply shortages, noting in a fact sheet that the Commerce Department would work to “facilitate information flow” between chipmakers and end users and increase transparency.
In medicine, the administration will use the Defense Production Act to accelerate efforts to manufacture 50 to 100 critical drugs domestically rather than relying on imports.
And to address supply bottlenecks from lumber to steel that have raised fears of inflation, the administration is starting a task force focused on “homebuilding and construction, semiconductors, transportation, and agriculture and food”.
Semiconductors are a central focus in sprawling legislation currently before Congress, which would pump billions of dollars into creating domestic production capacity for the chips used in everything from consumer electronics to military equipment.
Biden has said China will not surpass the US as a global leader on his watch, and confronting Beijing is one of the few bipartisan issues in an otherwise deeply divided Congress.
But some lawmakers have expressed concerns that a package of China-related bills includes huge taxpayer-funded outlays for companies without safeguards to prevent them from sending related production or research to China.