Policy makers have long sought to promote rapid economic growth. But as we shape our post-pandemic economy, we also need to strengthen our economic resilience both in America and around the world.
In recent years, the global economy has become increasingly vulnerable to supply shortages and price shocks. The coronavirus pandemic has led to severe supply chain disruptions as economic activity has recovered from the fastest ever decline in global trade. Russia’s immoral war in Ukraine has created turmoil in global energy markets and spikes in the prices of other commodities.
Experts expect periodic supply shocks to become more frequent. Climate change produces an acceleration of extreme weather events, with longer and more intense disasters potentially setting aside more farms and factories. These disruptions will affect workers, businesses and households across the economy.
In a speech in Michigan earlier this month, I explained how the Biden administration’s business plan will mitigate such shocks for American workers and businesses. The plan proposes solutions to these global supply shocks, with America acting in concert with our partners and allies around the world. We have four priority areas: energy, food, digital technology and public health.
First, energy security. The contribution that our global dependence on oil makes to climate change has been evident for some time. It also exposes us to geopolitical risks. In the past, Russia has marketed itself as a reliable energy partner. But it is using its natural gas and oil exports as a tool of geopolitical coercion on the rest of the globe. When we and our allies reduce our dependence on fossil fuels, we are not only addressing the climate crisis, but we are strengthening our resilience to deliver shocks like the one we are experiencing this year.
To that end, the administration has just implemented the most aggressive climate action in our nation’s history. The Inflation Reduction Act provides consumers and businesses with tax credits that will increase clean energy production in the United States. This legislation, along with the bipartisan infrastructure law, is expected to reduce greenhouse gas emissions by more than 1 billion tonnes in 2030, directly contributing to our effort to combat climate change. Accelerating the transition to clean energy will protect the planet and make the American economy less vulnerable to the actions of an autocrat on the other side of the world. In addition, US energy investments will bring significant benefits to the rest of the world by reducing the costs of new clean energy technologies.
The administration is also responding directly to short-term disruptions caused by Russia’s actions. The Department of Energy released a historic volume of oil from the Strategic Petroleum Reserve to support crude oil supplies and, through the International Energy Agency, we coordinated with other countries that have pledged to supply tens of millions of additional barrels this year from their reserves. We have also expanded liquefied natural gas exports to Europe and set up a joint energy security task force with the European Commission.
Finally, the G7 finance ministers agreed to finalize and apply a ceiling on the price of Russian oil. Our goal is to keep the flow of oil in global markets at lower prices, while reducing the Kremlin’s revenue. We shouldn’t allow Vladimir Putin to profit from a war he has started. The maximum price of Russian oil will especially benefit citizens of low- and middle-income oil-importing countries. This group includes some of the poorest and most vulnerable countries in the world, which have suffered the most from the fallout from the Russian war in Ukraine.
Our second priority is to improve food security. Regional conflicts, climate change, and COVID economic disruptions have hampered global food production for some time. But Russia’s illegal war against Ukraine has turned the stress on our food systems into a crisis in many countries.
The United States has taken, and will continue to take, strong actions to provide food for those who need it now. Our efforts include emergency interventions such as the $ 2.9 billion in additional food security assistance announced yesterday, in addition to the billions already committed this year. We are also increasing investments in long-term food resilience, including encouraging production practices that increase agricultural yields while mitigating emissions. We are promoting innovations such as urban agriculture. And we’re focusing on crucial logistics and infrastructure, not just for growing food, but also for storing and transporting it.
In May, the International Monetary Fund, the World Bank and other international financial institutions released a food security action plan that will support vulnerable people and climate-resilient food systems, help mitigate fertilizer shortages and promote trade. open. The Biden administration is particularly pleased to contribute $ 155 million this year to the Global Agriculture and Food Security Program, which will leverage multilateral institutions to advance promising new projects, such as providing farmers with more resistant seeds. drought, heat and other extreme conditions. This will help revive agricultural production.
Our third priority is digital technology. During the pandemic, significant supply disruptions resulted from fragile supply chains for critical goods, especially semiconductors. The microchips have been so scarce that, according to one estimate, the shortage resulted in a $ 240 billion loss in US manufacturing last year alone. Car production had to be cut by millions of vehicles. Furthermore, the semiconductor industry is characterized by extreme concentration risk. Last year, nearly all of the world’s most advanced semiconductor manufacturing took place in a single East Asian economy: Taiwan.
The United States and other countries need safe and reliable supply chains for semiconductors, which are among the most fundamental modern technologies. The recently passed CHIPS and Science Act will establish and expand state-of-the-art semiconductor manufacturing in the United States and build a sufficient and stable supply of mature semiconductors. The tens of billions of dollars in incentives under the law for semiconductor manufacturing in America will reduce the risk of “pain points” in the supply chain. It will restore confidence that the chips needed for global production of goods – toasters, computers, advanced industrial machinery – will be available when and where they are needed.
Our fourth priority is to promote public health. If nothing else, the past couple of years have taught us that pandemics can happen. And when they do, they can stop the national and global economy.
We are dedicated, first of all, to fighting the coronavirus pandemic. More than 600 million doses of the vaccine have been administered in the United States through the largest vaccination campaign ever carried out in our nation. And the United States has also led the global effort to share COVID vaccine doses. We have delivered more than 620 million doses to more than 110 countries. These vaccines are part of our strategy to fight COVID around the world, which in turn helps protect Americans.
But COVID won’t be the latest threat to global health and our own economic stability. So our work also extends to long-term investments in public health. These investments will enable us to respond more quickly and effectively to future threats. At home, the American Rescue Plan has provided a historic investment in our public health infrastructure. Abroad, with US leadership, the G20 and other partners earlier this month launched a new fund, hosted at the World Bank, for pandemic prevention, preparedness and response. The fund’s objective is to provide a dedicated funding stream for low- and middle-income countries. So far, the United States and our partners have committed $ 1.4 billion, and this is just the beginning.
Looking ahead, we intend to mitigate supply chain vulnerabilities while strengthening global economic ties. Global trade brings economic efficiencies. We have many countries and are committed to deepening economic integration with them. This approach, which we call “friendshoring”, allows us to continue to securely extend market access. And it reduces both our risks and those of our trusted partners.
In all these ways, the Biden administration has placed resilient growth at the heart of its business plan. Promoting economic growth is essential, but it is not enough. The pandemic and the war in Ukraine offer vivid memories of how circumstances suddenly change. We need to raise our ambitions and protect ourselves and people around the world from the economic volatility that we may see in the months and years to come.