Biden Administration Begins Supply Chain Review
Biden’s Executive Order
Yesterday, President Biden signed an executive order calling for a review of supply chains for important materials including semiconductors, pharmaceuticals, and rare earth minerals. The reviews will look into whether the US is producing enough of these materials domestically, or if the country is too dependent on foreign suppliers.
The 100-day review will also examine US supply chain vulnerabilities that include environmental changes and extreme weather. After identifying risks, the Biden administration will work with American companies to build more reliable domestic supply chains.
The Chip Shortage
One of the most substantial supply chain dilemmas facing the US at the moment is the chip shortage. These chips are used in electronics, appliances, cars, and other products.
The pandemic has caused production delays and other problems for chip supply chains. Meanwhile, the work from home boom has caused a surge in demand for laptops, smartphones, and other products that require chips.
The chip shortage has recently placed strain on automakers around the world, including major car companies in the US.
General Motors (GM) said that lost production resulting from the chip shortage could lower its profits by up to $2 billion this year. Ford (F) reports that its vehicle output could shrink by up to 20% during the first quarter of 2021. These are the types of situations that the Biden administration hopes to prevent.
As the Biden Administration conducts its reviews, it will also be planning concrete action in an effort to help strengthen American supply chains, create jobs, and prevent problems like the chip supply squeeze in the future. As a spokesperson from the administration said, “Make no mistake, we’re not simply planning to order up reports. We are planning to take actions to close gaps as we identify them.”
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