US Supply Chain 'strike Force' To Keep Eye On China

The United States will target China with a new "strike force" to combat unfair trade practices, the Biden administration said on Tuesday, as it rolled out findings of a review of access to critical products, from semiconductors to electric-vehicle batteries.

The "supply chain trade strike force," led by the US trade representative, is looking for specific violations that contributed to a hollowing out of supply chains that could be addressed with tariffs or other remedies, including toward China, White House senior director for international economics and competitiveness Peter Harrell told reporters.

Officials also said the Department of Commerce is considering initiating a Section 232 investigation into the national security impact of neodymium magnet imports used in motors and other industrial applications, which the United States largely obtains 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 US access to critical goods like those used in pharmaceuticals as well as rare earth minerals, for which the United States 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 challenges posed by the world's second-largest economy.

"We’re trying to understand all of the logistics behind the supply chain” to loosen bottlenecks, said Jared Bernstein, an economic adviser to Biden. “One of the best ways to do that is to talk to people in the industry and we’re doing a lot of that."

The United States faced serious challenges in obtaining 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.

While the White House said it is working closely with private industry to find solutions for the shortages, officials also said companies were part of the problem.

"Decades of focusing on labour as a cost to be managed and not an asset to be invested in have weakened our domestic supply chains, undermining wages and union density for our workers," and made it harder for companies to find skilled talent, Sameera Fazili, deputy director of the National Economic Council, told reporters.

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. (Reuters)