White House Issues Final Report On Supply Chain Risks And Considers Section 232 Investigation Into Imports Of Neodymium Magnets

Husch Blackwell LLP

President Biden issued Executive Order (“EO”) 14017 titled “America’s Supply Chains” on February 24, 2021, ordering 100-day and 1-year reviews of certain critical supply chains.  On June 8, 2021, a final report was published, officially marking the end of the 100-day reviews under EO 14017.  The reviews assessed risks posed to the following critical supply chains:

  • Semiconductor manufacturing and advanced packaging
  • High-capacity batteries, including electric vehicle batteries
  • Critical minerals, including rare earth elements
  • Pharmaceuticals and active pharmaceutical ingredients

The White House’s final report covers a range of topics and includes many domestic manufacturing initiatives.  Though some of the topics are clearly from a strategic, long-term outlook on the future of U.S. trade, such as securing “an end-to-end domestic supply chain for advanced batteries” and building supply chain “resilience,” the report also included  more specific policy recommendations which can be taken in the near term.  For example, the fact sheet for the report stated that the Federal Acquisition Regulatory Council plans to issue a proposed rule to “develop a new process for preferencing critical products that are in manufactured products or component parts, under the Buy American Act.”

Additionally, the U.S. Department of Commerce will evaluate whether to initiate an investigation into imports of neodymium (NdFeB) magnets under Section 232 of the Trade Expansion Act of 1962.  If initiated, a Section 232 investigation could result in the imposition of national security tariffs on imports of neodymium magnets into the United States.  These rare earth magnets are important components in smartphones, motors, and other devices, and are almost exclusively sourced from China.

Other initiatives in the final report include the U.S. Department of Agriculture’s plans to spend more than $4 billion on “Build Back Better initiatives” to intervene in food supply chains “to provide improved access to nutritious food, address racial equity and justice as well as climate change, make markets fair and competitive, provide ongoing support for producers and workers, and create greater resilience in the food supply chain.”  The U.S. Trade Representative will also establish a “trade strike force” to propose enforcements actions, both unilateral and multilateral, against unfair foreign trade practices.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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