President Joe Biden died in Michigan last month Push America to take the lead in electric vehicle manufacturing– or risk ceding economic leadership in the automotive and other sectors to China. The President promised more well-paid jobs in the country and re-designed our supply chains in mobility and other sectors for domestic production.
We need more domestic production and more high-paying jobs that come with it – but we will not achieve that on our own. That’s because it’s not always realistic to pivot supply chains at home; we rely on components and materials from many parts of the world. There is a better way forward, and it starts with us selectively engaging in our trade and co-production relationships with friends and allies we trust – what we “Ally. “
in the Announced its supply chain resilience strategy, The Biden White House recently embraced ally shoring as the most realistic and effective way to ensure US supply chains are never as vulnerable as was exposed by COVID-19. It is also the best way to rebuild our economies and that of our friends, which strengthens the health of all of our democracies. In addition, working together to rewire supply chains and co-produce high-tech products in emerging sectors will serve to rebuild broken alliances and US global economic and political leadership, and to reassess China’s desire to build on its own authoritarian economic and political model the entire globe.
One reason that ally-shoring makes so much sense is that we do less “trade” in the automotive and other industries, but rather manufacture things together with other countries. This is especially true for our automotive and mobility industries. Almost 50% of The so-called “trade” of the Midwestern states takes place with Canada, and Mexico accounts for 30%. More than half of that North American trade and 37% of our trade with allies in the EU is in intermediate goods—Importance of components of a finished product. This “co-production” reality will apply to both electric vehicles and other emerging mobility products such as: AI-controlled delivery robotic vehicle is now “trained” on the streets of Ann Arbor, Mich..
Given the disruption from COVID-19, it’s understandable that many of our guides are propose “onshoring” of critical deliveries. But as attractive as onshoring may sound, it is not an effective way to win strategic competition with China. Not only would an onshoring move anger our allies, but it would also be problematic for U.S. companies (including our automakers) who want to continue doing business in overseas markets and using overseas-made components in products. It would also be inconvenient and incredibly expensive. With sophisticated, IT-enabled products like cars and phones that integrate dozens of components from around the world at the lowest possible cost, no one could afford to buy an exclusively domestically made product. Even attempting to land many supplies would diminish our influence on the world stage. Alliances also have advantages, especially when they are in the midst of a global strategic tug-of-war for precedence between autocratic and democratic political systems.
Ally shoring is a much better choice. It involves consciously sourcing essential materials, goods and services with countries that share our democratic values and our commitment to an open, transparent, rule-based international economic and trade regime. Many countries would prefer to work with the US rather than China and its Dependency-building and corrupting development approach, including cheaper manufacturers such as Mexico, Vietnam, India and other developing country economies that are essential to supply chain cost effectiveness and where we can work together to strengthen strong institutions, a level playing field for manufacturers and transparent supply chains.
Ally-shoring increases the reliability of critical supply chains while reducing reliance on China and other state actors who will try to continue to use that dependency to undermine the US. Revising relationships to foster partnership with countries that share our values and interests would reduce our vulnerability while maintaining access to a wide variety of goods and markets for US businesses and consumers alike.
The Biden Administration critical review of the supply chain– which is due shortly – could encourage ally shoring. The Senate could also help the country turn to allies for support by giving the Innovation and Competition Act 2021. This extensive legislation contains several provisions on the resilience and competitiveness of the supply chain, including a “Strategic Competition Act” which speaks of the “prioritization” of alliances and partnerships. In addition, ongoing legislative efforts The Helsinki Commission – a bipartisan group of US lawmakers dedicated to combating foreign corruption, kleptocracy and authoritarianism – strengthen democratic principles and good governance norms around the world and strengthen the foundations for long-term economic security.
If the US takes steps towards ally shoring, it would be a powerful lever to put democracy at the center of our foreign policy (so many demand) in view of the aggressiveness of China and Russia in trying to make authoritarianism dominant. Aside from fighting rogues, we can focus on strategies that strengthen strong democratic governance. The deliberate re-centering of trade, manufacturing, sales and procurement networks with nations that agree to standards of openness, rule of law and democratic governance will help reverse the tide of anti-democratic rulers, norms and practices.
Perhaps most importantly at a moment of rebuilding the pandemic-ravaged domestic economy, allied support would also help open new economic opportunities and create more good jobs here at home – including where they are most needed, like in the industrial midwest. To understand how ally shoring can help increase production and create new jobs in the US, look no further than when supply chains were initially interrupted. As the country worked desperately to find or manufacture ventilators, masks, and medical devices, it turned to domestic manufacturers with global supply chains and manufacturing capabilities – many of them right here. Companies like General Motors have rebuilt sophisticated equipment and extensive networks in the Midwest and Mexico to answer the call. Ford Motor Company quickly followed suit.
Ally shoring is a vital tool in accelerating our economic recovery and delivering on the president’s promise “Foreign policy for the middle class”. Rethinking our domestic industrial and workplace “base” is at the heart of providing Americans with more opportunity and rebuilding a strong and affluent middle class. Overhauling our supply chains can also go a long way toward restoring U.S. global leadership and strategic alliances, protecting and strengthening democracy, and curbing the bad behavior of China (and other authoritarian) – all in one fell swoop.