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Know your supply chain and be prepared to explore alternatives
New US government reviews of supply chain risks focus on “critical” products and sectors, and could impact manufacturers, distributors and other participants in global supply chains.
A Biden Administration Executive Order directs federal agency heads to review all supply chain risks related to their agencies’ areas of oversight and to submit a series of “sectoral supply chain assessments.” For each covered supply chain, the agencies must produce “specific policy recommendations” to mitigate risks and ensure supply chain resilience.
What this means for you
The Order covers four classes of products—semiconductors; high-capacity batteries, including for electric vehicles; critical and strategic minerals, including rare earths; and pharmaceuticals and their active ingredients—as well as supply chains in six critical sectors—defense; public health; information technology; transportation; energy and food production. If your business involves any of these products or sectors, government reviews will try to identify risks that could leave the US vulnerable to reductions in the availability and integrity of critical goods, products and services. Depending on the recommendations, the Biden Administration may then explore using trade policies and agreements to strengthen the resilience of US supply chains, among other measures.
Steps to take now
While US government agencies are reviewing specific supply chain vulnerabilities, this is a good time to perform your own supply chain review, especially if your business involves any of the four listed classes of products and six listed sectors, and will come under immediate scrutiny. The US agency reviews will include whether supply chains are dependent on competitor countries and key manufacturing and production facilities outside the US, as well as digital products that could be subject to failure or exploitation. If you identify vulnerabilities, start addressing them. This could include plans to take advantage of any future federal incentives that may be designed to attract and retain investments in production of certain goods and materials in the US.
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