In a time of increasing geopolitical uncertainty, it's more important than ever for business leaders to assess their operations. New legislation in Washington could present opportunities for companies in many industries to rethink where they make goods and how they move them. But they shouldn’t wait for a bill to become law to start assessing and potentially adapting their operations.
The US House of Representatives recently passed the America COMPETES Act of 2022, aimed at boosting the competitiveness of US companies and strengthening supply chains in the global economy. The legislation follows a similar Senate bill, the US Innovation and Competition Act, which passed with bipartisan support in 2021. It also aligns with the Infrastructure Investment and Jobs Act passed last year, which includes strengthening US supply chains.
The differences in the House and Senate bills would need to be reconciled into one set of legislative items before being considered by President Joe Biden, who has voiced support for helping American businesses become more competitive. Given the general sentiment, companies should consider moving beyond simply understanding the potential benefits and requirements they’ll have to navigate with a new law. They also should assess how they can improve their long-term positions in an environment in which the US government may increase its support of domestic manufacturing, supply chains and other critical elements of the economy.
The House bill includes a host of measures aimed at increasing US competitiveness with other countries, including China, and it could have far-reaching implications beyond that. The measures include:
In the near term, companies that could benefit from these funding initiatives should consider these key questions:
Industrial shifts over the last few decades have spurred arguments that the US is now at a competitive disadvantage, and the new legislation raises a key question: Could this be the dawn of a new era of industrial agenda-setting at the federal level?
There are signs that it might be. In addition to the provisions discussed above, the House bill would strengthen US anti-dumping and countervailing duty rules, reauthorize key tariff relief programs and renew the Trade Adjustment Assistance Program, which provides aid to American workers who lose their jobs or whose wages shrink because of competition from imports.
The national industrial policy outlined by these measures could potentially guide the US into a new phase of supply chain resilience. Government and business leaders have been advocating the reshoring and nearshoring of US manufacturing for several years, with scant results to date. Could that now start to change? If microchip manufacturing provides a model, could other sectors follow? Given the prevalence of semiconductors and the importance of secure supply chains in many industries, companies should prepare for long-term evolution as they assess the immediate impacts of a new law.