"US Manufacturing Revival"... Yellen Minister Courts IRA-Benefited Companies

U.S. Treasury Secretary Janet Yellen visited a raw material production plant for electric vehicle batteries, reiterating the need to decouple supply chains from China. This is interpreted as an effort to win votes from companies benefiting from the Inflation Reduction Act (IRA), which President Joe Biden, who is running for re-election next year, touts as a key achievement.

On the 30th (local time), Secretary Yellen toured a lithium plant near Charlotte, North Carolina, inspecting facilities that process lithium hydroxide. This plant doubled its production capacity following increased electric vehicle demand, thanks to tax credit benefits under the IRA enacted last year.

In a speech inside the factory warehouse, Secretary Yellen once again emphasized that major industrial supply chains should not rely on China. She said, "America’s energy security depends on supply chain resilience," adding, "For too long, the supply of critical raw materials and the manufacturing capabilities to process them have been concentrated outside our borders."

She continued, "Important supply chains in areas like clean energy have been concentrated in China, partly due to decades of (China’s) unfair and non-market practices."

[Image source=AFP Yonhap News]

Lithium, a key mineral for batteries, is a raw material whose entire supply chain?from mining to refining and processing?is dominated by China, with China holding a 67% share in the lithium industry. She warned that excessive U.S. dependence on China and other countries could make supply chains more vulnerable to disruptions, including natural disasters, macroeconomic factors, and deliberate actions such as economic coercion.

The U.S. has criticized China for using economic coercion by restricting access to its market or halting exports of key raw materials as a means to pressure other countries.

Secretary Yellen explained that the Biden administration aims to ensure long-term energy and economic security through economic policies focused on revitalizing U.S. manufacturing, including clean energy and electric vehicle subsidies under the IRA.

She noted that since President Biden took office, $614 billion has been invested in clean energy, with $142 billion benefiting the electric vehicle battery sector and $71 billion supporting clean energy production facilities.

Secretary Yellen also emphasized the continued strength of the U.S. economy. After her speech, she told reporters on site that the recently rising unemployment rate has stabilized and that "there are many signs our economy will achieve a soft landing," according to major foreign media.

She highlighted that while the Federal Reserve (Fed) previously implemented aggressive tightening policies to curb inflation, which led to recessions, such drastic tightening is not currently necessary.

Secretary Yellen said, "(In the past) aggressive tightening may have been necessary to reduce inflation and deeply rooted inflation expectations, but now we do not need to do that."

Major foreign media noted that although the U.S. economy showed an unexpected annualized growth rate of 5.2% in the third quarter of this year, public opinion polls indicate a precarious situation with President Biden trailing former President Donald Trump, the leading Republican candidate.