Hearings to examine trade in critical supply chains.

Committee on Finance

2025-05-14

Source: Congress.gov

Summary

This hearing focused on the critical issue of American supply chains, with witnesses sharing insights on various industries and the impact of current trade policies. The discussion highlighted concerns about China's growing influence over global supply chains and the need for a robust, strategic U.S. response . Participants emphasized the importance of domestic manufacturing, supply chain resilience, and the effectiveness of different trade tools .

Themes

China's Dominance and Supply Chain Vulnerabilities

Speakers expressed significant concern over China's increasing control over critical global supply chains and strategic resources . China is identified as the leading producer for 30 of 50 critical minerals, leveraging trade to control 65-90% of key mineral processing worldwide . This dominance creates substantial economic and national security vulnerabilities for the U.S. [ 01:16:05 ]

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. The U.S. faces limitations in domestic mineral production due to geology, necessitating international partnerships and a strategic coalition to reduce dependence .

Impact of Tariffs on American Industries

The discussion frequently revolved around the negative consequences of broad, untargeted tariffs on various American sectors . The American Soybean Association reported severe impacts from past trade wars, losing significant market share in China, and noted that the farm economy is in a "dire situation" due to lower prices and higher input costs . The medical technology industry, despite being largely U.S.-based, faces challenges due to its highly regulated nature, complex global supply chains, and fixed reimbursement models, making it difficult to absorb increased costs from tariffs . The semiconductor industry expressed concerns that broad tariffs could increase costs of critical inputs, hindering its ability to innovate and compete globally .

Recommendations for Trade Policy and Supply Chain Resilience

Witnesses and senators offered several recommendations for a more effective trade policy. These included adopting targeted and strategic tariffs instead of blanket tariffs, especially to avoid penalizing raw material imports essential for domestic processing . There was a call to expand and strengthen tax credits for advanced manufacturing, including chip research and design, to incentivize domestic production and innovation . Prioritizing trade agreements with strategic allies, such as Canada, and developing sector-specific agreements were highlighted as crucial for securing mineral access and strengthening supply chains . Additionally, integrating U.S. offtake requirements into financing for critical mineral projects was suggested to prevent resources from flowing back to competitors .

Tone of the Meeting

The meeting exhibited a serious and concerned tone, with participants expressing deep worries about the current state and future of American supply chains and trade policy . There was a clear bipartisan agreement on the importance of resilient supply chains and addressing China's dominance . However, a sharp division and critical debate arose regarding the effectiveness and implications of the Trump administration's broad tariff policies . Speakers from affected industries conveyed a sense of urgency and economic hardship, particularly concerning farmers, and the medical technology and semiconductor sectors . The overall mood was somber and analytical, punctuated by calls for more strategic, targeted, and predictable trade approaches .

Participants

Transcript

M
Mike Crapo
This morning we had a hearing on a very important issue with regard to our critical supply chains, and I appreciate our witnesses being here with us to share your wisdom.
We will introduce you after our opening remarks.
M
Mike Crapo
Trade has the ability to increase productivity, incomes, and the availability of goods.
While we talk often about how increased supply and choice of goods that come from international trade benefit our consumers, we sometimes forget that this also benefits our producers.
M
Mike Crapo
In fact, a majority of what we import each year is reinvested into more manufacturing, processing, and farming activity.   Efficient and reliable supply chains help American businesses, farmers, and workers expand their production and focus their resources on the high-value aspects of industry.
The issue we must be wary about is when supply chains turn unreliable, in particularly because they are controlled by countries that refuse to follow free market rules, such as China.   As we are all aware, China continues its march toward expanding control over key resources and goods, and thus over the world's supply chains.
M
Mike Crapo
For example, advanced semiconductors increasingly rely on the rare earth mineral dysprosium, 99 percent of which comes from China.
This is not an isolated case where China has dominance over a strategic resource.
M
Mike Crapo
China controls over 90% of global processing for rare earths and 70% for cobalt, which is used in batteries for electric cars, smartphones, and other components.  The way China uses trade and investment to expand its control over resources outside its own borders is also particularly concerning.
Indonesia has 40% of the world's reserves for nickel, the largest of any single country.
M
Mike Crapo
Yet Chinese firms control about 75% of Indonesia's nickel refining capacity.
We need to take a hard look at the reality of our situation and develop an aggressive strategy to counter China.
M
Mike Crapo
Our domestic policies are at fault in some instances.
There are things we can produce efficiently here, but burdensome and unnecessary regulations stalls development of many important projects.   We should not have to learn from another economic shock like the oil embargo of the 1970s to realize where we have the resources or potential for investment it must be unleashed.
M
Mike Crapo
Both sides of the aisle agree that we need a strong semiconductor industry.  In Asia, new semiconductor fabs are being built and deployed in under three years.   In the United States, the semiconductor industry, one of the safest manufacturing sectors for workers, must contend with a myriad of permitting measures that provide only marginal, if any, benefit.
And these permits guarantee increased delays and costs, often adding years to projects.   As a part of its economic policy, the Trump administration has prioritized deregulation as a means to drive economic growth.  And I look forward to working with them to rationalize our regulatory system.
M
Mike Crapo
In many other cases, geography and geology do not provide the United States with all the natural resources that we require.
M
Mike Crapo
Here, the fault rests mainly with the failure to develop an affirmative trade policy.
M
Mike Crapo
An affirmative trade policy ensures our consumers and manufacturers have access to the resources that our nation needs to be secure and independent.
Here, for example, the Trump administration was correct to exempt Canadian potash, a key nutrient for our corn and soy farmers, from recent tariffs.
M
Mike Crapo
Another key to the administration's economic approach is to renegotiate global trade deals, including deals that reclaim America's lead over China.
Critically, these deals will be particularly useful in strengthening supply chains if they improve market access opportunities.
M
Mike Crapo
Our trading partners must respect American investment and afford it the same treatment given to their own companies.
M
Mike Crapo
Our partners must also realize that it bolsters their security when they do not inhibit access to cutting-edge American technology, like our state-of-the-art medical devices.
Unfortunately, a number of trading partners use price controls, technology theft, weak intellectual property protections, or unreasonable government procurement policies to keep these devices out of their markets.   Such actions only undermine the health of their own citizens while leaving a strategic opening for China.  Today we have an opportunity to consider these issues carefully.
M
Mike Crapo
Our four witnesses are experts on industries critical to America's economic security.
we should encourage thoughtful debate on how to advance a trade policy that strengthens the security of our supply chains and creates opportunities for all Americans.  I'd like to now turn to Senator Wyden for his remarks.
R
Ron Wyden
Thank you very much, Mr. Chairman.
And our committee is back again to assess Donald Trump's trade policy.  And I'd like to say it's not exactly a command performance.   Our country is now stuck in an endless trade cycle that Donald Trump has no idea how to escape.
R
Ron Wyden
What happens is Donald Trump makes big threats.
Then he imposes massive tariffs.
R
Ron Wyden
Then, after there's a huge outcry from American farmers, investors, and families, Donald Trump caves in.
And that starts the chaos all over again, having accomplished virtually nothing except damaging Americans' sacred credibility.
R
Ron Wyden
With all this thrashing around, we're still worse off today than we were before Donald Trump took office.
R
Ron Wyden
And this was documented this morning in several press articles.
Prices are higher.
R
Ron Wyden
Supply chains are in disarray.

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