By Gen. John Adams
Bipartisan consensus has finally emerged on the need to bring critical industries and supply chains home. Overreliance on imports—particularly from geopolitical rivals—is now an urgent issue for both parties. The question is whether this consensus can be turned into robust policy solutions to confront the startling scale of the problem.
President Biden’s recent executive order on supply chains calls for an immediate 100-day review of four critical sectors: pharmaceuticals, critical minerals, semiconductors, and advanced batteries like those used in electric vehicles (EVs). While pandemic-related supply chain disruptions of everything from raw materials to personal protective equipment highlight the urgency, China’s dominance of key supply chains should drive us to think big.
Consider mineral production and processing. China has made dominance of mineral markets a strategic priority, giving its companies government support in order to capture market share. From rare earth elements to key mineral inputs in lithium-ion batteries—namely lithium, cobalt, nickel and graphite—China’s control of global production and processing is unrivaled.
China uses its dominant position as both a source of geopolitical leverage and a means to swallow the industries that rely on these essential materials. For more than a decade, China has exploited its control of rare earth elements for strategic advantage. Just last month, rumblings emerged that Beijing might cut rare earth supplies to the U.S., to see if this would affect F-35 aircraft production. The national security implications are obvious.
China’s vise-like grip on the materials needed for electrification of the auto sector is just as concerning. The shift to EVs has become a sprint. From GM to Ford and Tesla, the future of transportation will be electric. But despite U.S. producers’ ambitions, China is far in the lead as it aims to dominate auto manufacturing for the remainder of the 21st century.
China’s metal mining underpins this dominance. Given preferred access to key materials, Chinese battery manufacturers are gobbling up the global market. As of last year, China had 107 battery mega-factories in the pipeline, with 53 of them now active and in production. In contrast, the U.S. has only nine battery mega-factories planned or producing. The auto industry—once the crown jewel of American manufacturing might—is in danger of slipping away.
Despite vast domestic resources, U.S. mineral import reliance has doubled in just the past two decades. And for nearly two dozen minerals and metals that the Departments of Defense and Interior have classified as critical to U.S. national and economy security, China is the dominant supplier.
The Biden administration’s supply chain review should formalize what we already know: it’s time for multi-faceted, aggressive action to bring these supply chains home right now.
The hollowing out of our auto industry and its millions of good, family-supporting jobs is something we cannot let happen. Nor can we let China tighten its grip on the production of irreplaceable materials used in our most advanced weapons systems.
There is no building back better without the material supply chains needed to support infrastructure investment. Moreover, national security requires the reshoring of critical industries. From minerals to pharmaceuticals, we must ensure safe domestic production using the full breadth of our policy tools. The time for half-measures is long past.