TSX:NEO - Post Discussion
Post by
Possibleidiot01 on Feb 25, 2021 8:16am
Biden executive order
Biden signs executive order to review critical supply chains
- President Biden has signed a fresh executive order mandating a 100-day review of critical product supply chains in the U.S., focused on semiconductors, key minerals and materials, active pharmaceutical ingredients and advanced batteries like the ones used in electric vehicles. "There is strong bipartisan support for fast reviews of these four areas because they're essential for protecting and strengthening American competitiveness," he told a press conference. The order will also initiate a long-term review, to be completed within one year, that takes a look into fortifying six industry-specific sectors including defense, public health and biological preparedness, communications technology, transportation, energy and food production.
- Backdrop: The order is part of the administration's effort to secure domestic supply chains in the wake of the COVID-19 pandemic that highlighted several vulnerabilities. The U.S. struggled to get the personal protective equipment needed for health care workers early on in the pandemic, relying on China and other countries for the critical supplies. There has also been an ongoing shortage of semiconductor chips (especially for automobiles), while reports suggest China is exploring whether it can hurt U.S. defense contractors by limiting the export of rare earths.
- Response from Beijing: Chinese Foreign Ministry spokesman Zhao Lijian said the measures would "not help solve domestic problems" and only harm global trade. "China believes that artificial efforts to shift these chains and to decouple is not realistic. We hope the U.S. will earnestly respect market laws and free trade rules and uphold the safety and reliability and stability of global supply chains."
- While the order doesn't directly call out China or any specific country, White House officials have said an over-reliance on Beijing for critical goods was a key risk. The Biden administration may also work with "carrot and stick" approach, meaning financial incentives for companies that manufacture items domestically or limiting some imports for those who don't. In a letter to Biden, Sens. Marco Rubio (R., Fla.) and Chris Coons (D., Del.) recommended he invoke the Defense Production Act to "incentivize or, if necessary, require American companies to retain their domestic capacities during this time."
- With many American companies across multiple industries flagging the chip crunch, does the semiconductor shortage need another Operation Warp Speed?
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